US Banking Giants Advocate for Spot Bitcoin ETF Custodianship in Joint Letter to SEC
A group of prominent US banking institutions has sent a joint letter to the US Securities and Exchange Commission (SEC) urging the regulator to allow spot Bitcoin (BTC) exchange-traded fund (ETF) custodianship. The letter, which was submitted on Valentine’s Day, is addressed to SEC Chairman Gary Gensler and calls for the revision of a 2022 law that governs crypto custodianship, known as SAB No. 121. The banking organizations argue that this law restricts their ability to participate due to its on-balance sheet requirement, which presents challenges for highly regulated banks and impedes the development of responsible use cases for distributed ledger technology (DLT).
Proposed Modifications
In the joint letter, the banking groups propose two key modifications to SAB No. 121. Firstly, they recommend narrowing down the definition of “crypto asset.” Secondly, they suggest exempting banking organizations from listing these assets on their balance sheets while still requiring them to disclose their digital activity. This approach would address the concerns raised by banking organizations without compromising the objective of SAB No. 121, which is to promote transparency and disclosures to investors.
Industry Impact
If the SEC were to amend SAB No. 121 as requested, it could open doors for US banking institutions to offer custodial solutions for digital assets at scale. This move could also have broader implications for the adoption of blockchain technology and cryptocurrencies within traditional financial systems.
Featured Image: Shutterstock/Art Furnace
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