SEC Stands Firm on Crypto Custody Rule Despite Controversy

The SEC has reaffirmed its firm stance on restricting crypto custody services provided by regulated financial institutions.

In a recent address, SEC Chief Accountant Paul Munter emphasized that the commission’s position on SEC Staff Accounting Bulletin No. 121 (SAB 121) remains unchanged. He stated that institutions must list a liability on their balance sheets for the protection of crypto assets they hold on behalf of clients unless specific exceptions apply.

ETF Store President Nate Geraci observed that the SEC appears steadfast on SAB 121, indicating a reluctance to allow regulated entities to handle crypto custody. SAB 121, introduced in March 2022, has been a contentious issue, as it effectively prevents banks and similar institutions from offering crypto custody services.

Munter acknowledged that while the SEC has considered various scenarios, not all custody arrangements fit within SAB 121’s framework. For instance, banks with bankruptcy protections or broker-dealers retaining control of cryptographic keys may not need to record such liabilities.

Despite criticism, including from SEC Commissioner Hester Peirce, who has expressed ongoing concerns about the rule, efforts to overturn the guidance have been unsuccessful, with President Biden vetoing a recent repeal attempt.

Author

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.