In a recent development, major banks and financial institutions in the United States are urging the Securities and Exchange Commission (SEC) to reassess its definition of crypto assets. The push comes with the aim of expanding their involvement in the cryptocurrency space, specifically by serving as custodians for recently approved spot #Bitcoin in exchange-traded funds (ETFs).
A coalition of trade groups, including the Bank Policy Institute, American Bankers Association, Financial Services Forum, and Securities Industry and Financial Markets Association, made their case in a letter addressed to Sec Chair Gary Gensler on February 14. The letter highlighted the absence of U.S. banks as asset custodians for the 11 recently approved spot Bitcoin #ETFs. , despite these banks traditionally playing such a role for other exchange-traded products (ETPs).
The SEC's approval of these ETFs marked a significant step forward in providing investors regulated access to the Bitcoin asset class. However, the notable exclusion of banking organizations as custodians prompted the trade group coalition to request modifications to Staff Accounting Bulletin 121 (SAB 121). SAB 121, issued in March 2022, offers guidance on accounting for crypto asset custody obligations.
The banking associations argued that a reconsideration of SAB 121 would pave the way for U.S. banks to actively participate in the custodianship of crypto assets tied to ETFs. This move aligns with the broader trend of traditional financial institutions seeking an expanded role in the rapidly evolving cryptocurrency landscape.
As discussions unfold between the banking groups and the SEC, the outcome could shape the future landscape for institutional involvement in crypto-related financial products, potentially opening doors for major banks to take on crucial custodial responsibilities in the burgeoning #BitcoinETF💰💰💰 market.
