Fox journalist Eleanor Terrett has raised questions about whether the recent actions by the US Securities and Exchange Commission (SEC) signify an acknowledgment of the necessity to relax the famed Staff Accounting Bulletin(SAB) 121’s requirements for banks and brokerages.
Terret’s comments come in response to a Bloomberg report that revealed the US SEC opened a path for banks and brokerages to exclude their customers’ crypto holdings from their balance sheets. The report, quoting an SEC insider, revealed that the agency’s staff have begun issuing guidance indicating specific arrangements might not require balance sheet liabilities under previous directives from two years ago.
The SEC staff issued the SAB 121 guidelines in 2022, just months before the collapse of the now-defunct crypto exchange FTX. They cited the need for extraordinary reporting to inform investors about cryptocurrencies’ technological and legal risks.
Banking and financial industry groups have reportedly lobbied Congress to rescind the guidance because it is an agency rule, not a proper legislation. However, a recent attempt in the House to override a presidential veto of a measure aimed at revoking the guidelines failed, leaving them in place.
According to Terrett, the Bloomberg revelation about the SEC’s new stance raises speculation that it might be in response to congressional pressure for reform in regulatory requirements.
Whoa. Is this the @SECGov realizing it needs to relax SAB 121 requirements when it comes to banks and brokerages?
Reaction to Congress’s campaign for change?
SEC Allows Some Exceptions to Crypto Accounting Compliancehttps://t.co/em3rkGyjjN via @Aiacone
— Eleanor Terrett (@EleanorTerrett) July 12, 2024
The recent Bloomberg report mentioned that the change in stance could expand the options for American crypto holders to access a wider range of companies. Previously, lenders had argued that the accounting treatment prevented them from offering crypto services due to the capital requirements triggered by larger balance sheets. The report also stated that financial institutions are showing increased interest in the crypto industry, especially following the SEC’s approval of spot Bitcoin products.
However, some stakeholders in the crypto community, like the founder of Cryptonairz, express frustration with the current regulatory environment and call for the SEC leadership to be more supportive of crypto market growth in the US.
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