Lawmakers are calling for a change in how the SEC regulates Bitcoin custody, saying it’s time for banks to get involved.
A group of US lawmakers, including some big names in the crypto world, are pushing the Securities and Exchange Commission (SEC) to loosen its grip on Bitcoin custody. They’re saying the current rules are confusing and could actually make things riskier for investors.
What’s the Problem with the SEC’s Rules?
The SEC has a rule called SAB 121 that requires companies that hold Bitcoin for their customers to treat it as a liability on their balance sheets. This means they have to report the value of the Bitcoin they hold, which can fluctuate wildly.
Lawmakers say this rule is a big problem for a few reasons:
- It doesn’t reflect how Bitcoin works. Bitcoin is a decentralized asset, not a traditional stock or bond.
- It’s confusing for banks. They’re not sure how to comply with the rule, and it’s creating a lot of uncertainty.
- It could make Bitcoin custody less accessible. Banks might be less likely to offer Bitcoin custody services if they have to deal with these complex rules.
Congress is Stepping In
A group of lawmakers, including House Financial Services Chair Patrick McHenry and Senator Cynthia Lummis, sent a letter to the SEC asking them to scrap SAB 121. They argue that the rule is outdated and doesn’t make sense for the digital asset world.
They’re also pushing for the SEC to work with Congress to create clear and sensible rules for Bitcoin custody. They believe this would help to create a safer and more accessible environment for investors.
Could This Mean a Shift for Banks?
The timing of this push is interesting. Just a few days ago, the SEC gave Bank of New York Mellon (BNY) permission to hold Bitcoin for its customers, even though they were supposed to be following SAB 121.
This could be a sign that the SEC is starting to soften its stance on Bitcoin custody, but it’s still too early to say. Some people believe that this could encourage more banks to get involved in the crypto space.
What’s Next?
It remains to be seen whether the SEC will listen to Congress’s demands. But one thing is clear: the debate over Bitcoin custody is heating up, and it’s likely to continue for some time.
