The House Financial Services Committee (HSFC) in the United States has approved a resolution to overturn a guideline from the Securities and Exchange Commission (SEC) that has prevented banks from offering crypto custody services. During a hearing on February 29, 31 members of the committee voted in favor of the resolution, while 20 voted against it. The resolution aims to remove obstacles that prevent regulated banks from acting as custodians of digital assets by overturning Staff Accounting Bulletin No. 121 (SAB 121), introduced by the SEC in March 2022. SAB 121 requires institutions to record crypto assets held in custody as liabilities on their balance sheets. Republican Congressman Mike Flood, who introduced the resolution, argued that SAB 121 unfairly treated custodial assets as on-balance sheet liabilities, which would impact banks’ regulatory obligations. Flood stated that custodial assets, including digital assets like Bitcoin (BTC), are typically considered off-balance sheet. The resolution was co-sponsored by Democrat Representative Wiley Nickel, who argued that SAB 121 exceeded its scope as an accounting bulletin and had effectively become a de facto law. However, the resolution still needs to be passed in a full floor vote in the House and the Senate before SAB 121 can be revoked. During the hearing, Republican Congressman Tom Emmer criticized SAB 121 as an “illegal” example of SEC Chair Gary Gensler’s bias against the digital asset ecosystem, stating that it introduced unnecessary concentration risk. Emmer pointed out that none of the eleven approved Bitcoin ETFs had banks providing custodial services, which he considered risky. On the other hand, Democrat Congresswoman Maxine Waters, who voted against the resolution, viewed the attempt to rescind SAB 121 as ironic, as it hindered the SEC’s ability to provide clarity on crypto. Waters emphasized that while Republicans and the crypto industry often complained about a lack of clarity from the SEC, the resolution blocked the SEC staff from offering that clarity. Staff Accounting Bulletins (SABs) are non-binding guidelines used by the SEC staff to help companies understand how to account for customer crypto holdings, but they are not enforceable laws.
Resolution to involve banks in crypto custody progresses among US lawmakers