US Banks Push for Crypto Custodianship
As a crypto analyst, you must be aware of the recent push by big US banks to change the rules that will enable them to hold digital assets on behalf of Bitcoin ETF customers. In a letter dated February 14, several leading financial firms in the US urged the SEC Chair, Gary Gensler, to change the definition of crypto assets to allow them to venture deeper into the crypto industry as custodians for digital assets. However, you need to be aware that this is a high-risk investment, and you should be prepared to lose all the money you invest as this is a highly volatile market.
- US banks are pushing for changes in SEC rules to enable them to hold digital assets on behalf of Bitcoin ETF customers.
Why the Push for Change?
The letter submitted by US banks highlighted that they are missing out on custody business from the recently approved spot Bitcoin exchange-traded funds (ETFs). Banks are currently unable to serve as asset custodians to Bitcoin ETFs due to the Staff Accounting Bulletin 121 (SAB 121) guideline issued in March 2022. This guideline mandates banks to hold cryptocurrencies on their balance sheet, making it an expensive affair and preventing banks from exploring crypto asset custody.
- The SAB 121 guideline currently prevents banks from venturing into crypto asset custody.
- Banks are missing out on custody business due to existing regulations.
Bitcoin ETF Inflows Surge
The push for changes in the regulations comes as spot Bitcoin ETFs have seen positive net flows of $4.5 billion since launch. ETFs offered by BlackRock and Fidelity have attracted more assets during their first month of trading than any other ETF launched in the US in the last three decades.
- Spot Bitcoin ETFs have experienced strong positive net flows since launch.
- BlackRock and Fidelity ETFs have attracted substantial assets within the first month of trading.
Why US Banks Want to Venture into Crypto Custodianship
For US banks, the push to change the rules is driven by the desire to expand their business and tap into the growing demand for crypto custodianship. By being able to hold digital assets on behalf of Bitcoin ETF customers, banks can gain exposure to the booming crypto industry and generate new revenue streams.
- Banks want to expand their business and tap into the growing demand for crypto custodianship.
- By holding digital assets for Bitcoin ETF customers, banks can generate new revenue streams.
It is important to emphasize that while the push for crypto custodianship by US banks is a significant development in the crypto industry, investing in crypto assets carries a high level of risk. As a crypto analyst, you should exercise caution and be prepared for the volatile nature of the market.
Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment, and you should not expect to be protected if something goes wrong. 🚨🚨🚨
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