According to Odaily, Jerome Powell, the Chairman of the US Federal Reserve, testified before the US House Financial Services Committee on Wednesday. During the session, Congressman Josh Gottheimer questioned Powell about the US SEC's Staff Accounting Bulletin (SAB) 121. This directive requires banks to include digital assets held in custody in their balance sheets, significantly increasing the cost of providing digital asset custody services.
Gottheimer referred to Powell's previous statement that custodial assets do not belong on balance sheets and have always been treated as such. Powell generally confirmed this stance but refrained from commenting on the SEC's policy, stating that it falls within the SEC's jurisdiction. Critics argue that SAB 121 weakens banks' ability to provide secure digital asset custody, pushing these services towards entities with less regulation and increasing consumer risk.
Lawmakers have proposed overturning SAB 121 due to its negative impact. Despite the US Congress passing the first standalone cryptocurrency legislation to overturn SAB 121, President Biden vetoed the bill, emphasizing the need to establish a regulatory framework for digital assets.