Posted on 02/17/2024 1:56:48 PM PST by NoLibZone
On February 14, 2024, a significant development unfolded in the financial regulatory landscape as four leading financial associations—the Bank Policy Institute (BPI), the American Bankers Association (ABA), the Financial Services Forum (the Forum), and the Securities Industry and Financial Markets Association (SIFMA)—jointly addressed a letter to Gary Gensler, Chair of the U.S. Securities and Exchange Commission (SEC).
This letter represents a unified request from these influential bodies for the SEC to consider targeted modifications to Staff Accounting Bulletin No. 121 (SAB 121), a directive that has significantly impacted U.S. banking organizations’ ability to engage with digital assets since its issuance on March 31, 2022.
The Core of Their Request
The associations’ letter underscores the challenges that SAB 121 has introduced for regulated banking organizations, particularly in providing custodial solutions for digital assets at scale. They argue that the on-balance sheet requirement of SAB 121, coupled with a broad definition of “crypto-asset,” has deterred banking organizations from developing responsible use cases for distributed ledger technology (DLT). This, in turn, has kept activity outside the prudential perimeter, depriving the market of the legal and supervisory protections provided by federally-regulated banking organizations.
Specific Concerns Highlighted
Spot Bitcoin ETPs: The approval of 11 Spot Bitcoin Exchange-Traded Products (ETPs) by the SEC has opened investor access to this asset class through a regulated product. However, banking organizations are notably absent from serving as asset custodians for these ETPs due to the capital ratio and other requirements resulting from SAB 121. This scenario raises concerns about the safety and stability of the ecosystem and suggests a concentration risk that could be mitigated if banking organizations were allowed to provide custodial services.
Use of DLT for Traditional Financial Assets: The associations point out the potential benefits of using DLT to record traditional financial assets, such as bonds, which could streamline payment, clearing, reconciliation, and settlement services. However, SAB 121’s broad definition of “crypto-asset” poses a barrier to meaningful engagement in DLT-based projects by banking organizations. Proposed Modifications and Clarifications The letter outlines several targeted modifications to SAB 121 that the associations believe could address their concerns without undermining the SEC’s policy objectives:
Narrowing the Definition of “Crypto-Assets”: They suggest refining the definition to exclude traditional financial assets recorded or transferred using blockchain networks, as these do not present the same risks as cryptocurrencies.
Exempting Banking Organizations from On-Balance Sheet Treatment: The associations propose maintaining disclosure requirements while exempting banking organizations from the on-balance sheet treatment of crypto-assets. This approach would allow banking organizations to make necessary disclosures about their digital activity without the burdensome capital implications of SAB 121.
Looking Forward
The associations express their willingness to work collaboratively with the SEC to refine SAB 121, emphasizing their shared goals of investor protection, market integrity, and financial stability. They request a meeting with Chair Gensler and SEC staff to discuss their proposed modifications in detail.
Their letter making the request:
https://www.aba.com/-/media/documents/letters-to-congress-and-regulators/jointclsec20240214.pdf
NO NO NO NO, if we thought the manufactured banking crisis from real estate was bad in 2008, this will be 1 million times worse.
It will be used to collapse all banking (not that they won’t find another way but let us not help them)
Some how I can’t make myself trust electronic money.
But banks and financial institutions see the amount of money being transacted and want to get in; while simultaneously ordering democraps and the SEC to harass crypto companies. You have Jamie Dimon smearing crypto, while at the same time allowing his bank to accept it as payment AND creating whole divisions of crypto behind the scene for future business. Hypocrites all.
It's a mixed bag, very volatile. While the US dollar goes down in value over time, crypto is like a yo-yo, wild swings up and down.
I won't use it, but have invested in crypto trading companies. A stock I bought that was $8/share last year has recently jumped to $46 this year. But... it was $40/share a couple years ago. Wild swings in value. Crypto is very volatile - don't trust it.
I got into COIN etf at $67 less than a year ago. Closed at $180 yesterday
should note, COIN is not officially an etf yet run similarly.
“NO NO NO NO, if we thought the manufactured banking crisis from real estate was bad in 2008, this will be 1 million times worse. It will be used to collapse all banking (not that they won’t find another way but let us not help them)”
indeed ... bitcoin and their tens of thousands of Cousin Eddie shitcoins are LITERALLY an idea about nothing with zero utility value ... their only “value” is whatever a greater fool will pay, in other words, krapcoins are latter day magic beans ... sooner or later, the rubes will catch on for one reason or another and the magic bean trade will suddenly collapse in toto AGAIN, but unlike previous collapses in which the utilitarian financial system was unaffected, deep integration of the magic bean trade with the utilitarian financial system will collapse the whole magilicuti ...
Beware the moneychangers.
Crypto has been the #1 investment for 8 out of the last 11 years.
Of course it was the worst investment for the other three...feast or famine.
I am a buy and hold investor- so i have no issue weathering the storm
I wondered what happened to all those subprime mortgage guys.
Remember the trucker protest in Canada! What the government can do more easily with a cashless society
Precisely.
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