ABA backs bill to overturn SEC accounting bulletin

The American Bankers Association this week expressed support for a bipartisan House bill that would prohibit the SEC and federal banking agencies from requiring banks to include assets held in custody or safekeeping as a liability on the institution’s balance sheet. The Uniform Treatment of Custodial Assets Act would overturn an SEC bulletin from last year in which agency staff said that banks wishing to provide custodial services for digital assets investors must keep those assets on-balance sheet. Such a requirement “is a departure from the banking industry’s historical practice of treating custody assets off-balance sheet,” ABA said in a letter to House Financial Services Committee leaders.

“Banks have long provided safe and well-regulated custody services to investors for securities and other assets,” ABA said. “However, the implications of [the SEC bulletin]mean few banks are currently offering custody services for digital assets, leaving consumers with few options for a safe, well-regulated custody service for digital assets.”

The bill’s sponsors are Reps. Mike Flood (R-Neb.), Ritchie Torres (D-N.Y.), French Hill (R-Ark.) and Wiley Nickel (D-N.C.).