Congressional Call For Bitcoin Custody By Banks: Senators’ Letter To SEC’s Gensler Exposed

US Redisclosean laworiginaters from both chambers of Congress have apshown a convey inant step in advocating for a more likeable regulatory environment for Bitcoin (BTC) and crypto asset custodians. 

In a letter retainressed to US Securities and Exchange Corelocaterlookion (SEC) Chair Gary Gensler, a coalition of pro-crypto laworiginaters, including Hoengage Financial Services Chair Patrick McHenry and Senator Cynthia Lummis, has advised the SEC to rescind its accounting rule for digital assets, understandn as Staff Accounting Bulletin 121 (SAB 121).

Criticism Mounts Aacquirest SEC’s SAB 121

The letter, rerentd on Monday and upretaind by forty-two other key members of the Hoengage and Senate, underlines that Congress has conveyed “overwhelming” bipartisan help for disapproval of SAB 121 thraw the passage of H.J.Res.109. 

This resolution calls for the SEC to reponder its stance on the bulletin, which insists custodians to accomprehendledge a liability and defend a correplying offset on their equilibrium sheets, meacertaind at the imfragmentary appreciate of the customer’s digital assets. 

The laworiginaters argue that this approach strays from set uped accounting standards and flunks to accurately mirror the legitimate and economic obligations of custodians, potentiassociate putting users at wonderfuler hazard.

One of the key criticisms of SAB 121 is that it was carry outed without enough conferation with pdispolitential regulators, guideing to “confusion and inconsistencies” in its application among financial institutions. 

The laworiginaters declare that the SEC has circumvented the vital acunderstandledge and comment rulemaking process mandated by the Administrative Procedure Act (APA) by issuing this rule as staff guidance. 

They contend that the SEC’s Office of Chief Accountant (OCA) has only exacerbated the situation by toiling with pick institutions to elude the equilibrium sheet alerting insistments on a case-by-case basis, undermining the transparency and consistency that the SEC claims to uphgreater.

BNY Mellon’s Approval As Bitcoin Custodian Could Signal A Shift?

The timing of the letter is convey inant, coming fair four days after the SEC granted the Bank of New York (BNY) Mellon an exemption from SAB 121, labeling it as the first prohibitk to get such approval. 

This exemption could potentiassociate discneglect the door for other financial institutions to seek analogous opportunities, signaling a possible shift in the SEC’s approach towards traditional prohibitks go ining the cryptocurrency space. 

Michael Novogratz, CEO of Galaxy Digital, specuprocrastinateedd that this relocate by the SEC may encourage more prohibitks to include with digital assets, provided the regulatory landscape becomes more conducive.

However, the pro-crypto laworiginaters are calling for the SEC to collaborate with Congress to determine that Americans have access to defended and defended custodial set upments for Bitcoin and other digital assets. 

By rescinding SAB 121, they argue, the SEC would not only align itself with set uped accounting trains but also ease a more beneficial environment for traditional financial institutions watching to join in the cryptocurrency labelet.

At the time of writing, Bitcoin was trading at $63,240, having been in a firm range between the current price and the $62,000 label for the past scant days. 

Featured image from DALL-E, chart from TradingView.com