SEC Signals Possible Easing of Bank Crypto Custody Rules
On September 9, Paul Munter, the SEC’s chief accountant, hinted at a potential shift in the agency’s stance on the controversial Staff Accounting Bulletin-121 (SAB-121), which restricts banks from offering digital asset custody services.
In his address, Munter suggested that exemptions could be available, allowing certain banks and introducing brokers to bypass the stringent custody requirements of SAB-121. For banks, these exemptions would apply if they secure written consent from state regulators, manage assets in a “bankruptcy remote” way, adhere to clear contractual standards, and perform regular risk assessments.
Introducing brokers could also avoid SAB-121 requirements if they do not hold client private keys, are not transaction intermediaries, and obtain a legal opinion verifying their exempt status.
Galaxy’s head of research, Alex Thorn, noted that these exemptions could significantly reduce the number of entities affected by SAB-121. However, he pointed out that major national banks under the OCC’s oversight might still need to appeal directly to the SEC for any relief.
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Thorn suggested that the SEC’s adjustments to SAB-121 might be a response to substantial industry pushback and political pressure. He speculated that the original intent of SAB-121 might not have been to target banks and that the regulations could have been introduced in a manner perceived as punitive towards the crypto sector.
The SEC introduced SAB-121 in 2022, facing increasing criticism from US lawmakers who pushed for its repeal. In May, the House of Representatives voted to overturn the regulations, but President Biden vetoed the repeal, arguing that removing SAB-121 would weaken the SEC’s regulatory authority.
Alexander Stefanov
Reporter at CoinsPress
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.
