In a joint letter today, the American Bankers Association and three financial services trade associations asked the Securities and Exchange Commission to revisit a two-year-old agency policy on safeguarding cryptoassets, saying the requirements outlined in the document have harmed their members’ ability to develop and bring to market certain digital asset products and services.
The SEC in 2022 issued Staff Accounting Bulletin 121, which, among other things, requires SEC registrants to record an obligation to safeguard the cryptoassets that they hold at the fair value of the related assets. In their letter, the associations noted that the requirements in SAB 121 have prevented regulated banks from developing digital asset products and services, but not prevented nonregulatory nonbank actors from doing the same. They offered two recommendations for modifications “without undermining the stated policy objectives of the commission to enhance the information received by investors and other users of financial statements.”
The first modification would be to narrow the definition of “cryptoassets” to exclude traditional financial assets that use blockchain technology but that do not pose the same risks as cryptocurrencies. The second would be to exempt banking organizations from the on-balance sheet treatment of cryptoassets but still require them to make certain disclosures about their digital activity. “Balance sheet disclosure may be appropriate where the controls are not adequate to protect investors from the risk of custodied assets, which is not the case for banking organizations that are subject to robust oversight from the federal banking agencies,” the associations said.
