Background:
The US Securities and Exchange Commission (SEC) has yet to approve a spot Bitcoin (BTC) exchange-traded fund (ETF).
Industry Letter:
On Valentine’s Day, four major banking industry groups sent a joint letter to SEC Chairman Gary Gensler, advocating for the approval of spot BTC ETFs and requesting a modification to a 2022 law (SAB No. 121) that regulates crypto custodianship.
Concerns with SAB No. 121:
The banking groups argue that SAB No. 121 requires entities safeguarding digital assets to list them on their balance sheet at a fair value, which:
- Prevents banks from participating in digital asset custody at scale.
- Discourages banks from exploring responsible use cases for blockchain technology.
Proposed Solution:
The groups propose narrowing the definition of “crypto asset” and exempting banking organizations from on-sheet listing requirements while maintaining disclosure obligations. This, they argue, would:
- Address banks’ concerns without undermining the SEC’s goal of investor disclosure.
- Allow banks to provide custodial solutions for digital assets.
