SEC Relaxes Crypto Reporting Rules for Banks and Brokerages
The US Securities and Exchange Commission (SEC) announced new exemptions on July 11, freeing banks and brokerage firms from reporting customers’ crypto holdings on financial statements.
This regulatory relief, however, hinges on a crucial condition: financial institutions must prove their ability to manage digital asset risks effectively.
Depth Details into SEC Crypto Report Overturn
Bloomberg reports that the US SEC has begun issuing guidance clarifying that some crypto-related arrangements might not qualify as liabilities for financial statement reporting purposes.
This shift holds particular significance for large banks engaged in consultations with the SEC since 2023.
These institutions have secured conditional approval to bypass the reporting requirement, contingent upon their ability to guarantee the safeguarding of customer assets in bankruptcy scenarios.
The SEC’s recent move to relax crypto reporting rules comes two years after the introduction of its controversial SAB 121 guidance. This guidance sought to enhance transparency and risk management within the dynamic crypto landscape.
Under SAB 121, custodial obligations were to be recognized as liabilities on balance sheets, accompanied by comprehensive disclosures regarding associated risks.
SAB 121’s implementation, however, sparked considerable controversy. Industry stakeholders viewed the regulation as exceeding the SEC’s authority, asserting it placed undue burdens on businesses and hindered innovation.
Critics further contended that the regulation failed to draw a clear distinction between cryptocurrencies on public ledgers and traditional assets on permissioned ledgers, ultimately complicating compliance efforts.
Congressional Pressure on SAB 121 Precedes SEC Crypto Report Exemptions
The SEC’s announcement of new crypto reporting exemptions came amidst a backdrop of ongoing Congressional pressure to revise SAB 121.
On May 16, the US Senate voted to overturn the accounting bulletin . While the resolution, HJ Res. 109, received support from a majority of Senators (60 in favor, 38 opposed), the effort ultimately fell short.
President Joe Biden vetoed the resolution a few weeks later , defending SAB 121 as a reflection of the “considered technical” judgment of SEC staff.
He argued that overturning the bulletin would undermine the regulator’s ability to effectively address emerging challenges and risks within the evolving cryptocurrency market.
On July 11, the House of Representatives attempted to override the President’s veto, but fell short of the required two-thirds majority, with a vote of 228 in support, 184 against, and 21 abstentions.
That same day, however, the SEC announced its new exemptions for crypto reporting by banks and brokerages.
This unexpected move raised questions about whether the SEC might be adjusting its approach in response to the sustained pressure from lawmakers who favor a more flexible regulatory framework for the crypto industry.
Fox journalist Eleanor Terrett, for instance, has speculated that the exemptions could be a direct result of lobbying efforts by Congress , which has been actively advocating for adjustments to crypto regulations.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
Peanut the Squirrel Token Sparks Controversy After Owner Launches Justice Coin
Will Bitcoin’s Correction Continue or is it a Good Time to Buy?
US stocks head into holiday week with history on their side
Let’s take a look at how US equities typically perform this time of year and what we might see in the coming days
Cardano implements first ZK smart contract
Share link:In this post: Cardano has deployed its first zero-knowledge smart contract on the mainnet through the use of the Halo 2 zkSNARKs. The technology allows for secure and private verification of computations with the help of the network without disclosing sensitive information. ADA recently crossed the $1 level and went as high as $1.15 before a 17% drop.