SEC Guidance Creates Hurdle for Banks’ Crypto Plans

[ad_1]

Despite demand from an increasing number of their clients for cryptocurrency products and services, many banks are reportedly holding back on offering them because accounting guidance from the US Securities and Exchange Commission (SEC) makes it unprofitable to do so.

The March 31 accounting guidance from the SEC requires that public companies holding crypto assets for clients count them as liabilities on the balance sheets. Because banks are required by regulations to hold cash against balance sheet liabilities, that makes it uneconomical for banks to offer that service, Reuters reported Friday (Sept. 16), citing several sources.

Weve heard from a wide variety of stakeholders, banks among them, about how challenging this new staff accounting bulletin would be for them to be able to enter in to the space of custodying crypto assets, US Rep. Trey Hollingsworth said in an interview, per the report. This edit came down without guidance, without input, without feedback, without conversation being had with industry.

In its March 31 advisory, the SEC said this practice is necessary because crypto has technological, legal and regulatory risks, and at a conference last week an SEC representative said that these assets have unique risks that make them liabilities, according to the report.

PYMNTS research has found that financial institutions are not currently meeting consumers interests when it comes to cryptocurrencies.

Read more: Banks Use Bitcoin Rewards to Attract the Crypto-Curious Consumer

Nearly one in four Americans had owned crypto at some point in time by January 2022, but many banks have simply not made crypto a top priority, according to the Digital-First Banking Tracker, a PYMNTS and NCR collaboration.

At the World Economic Forums annual Davos meeting in May, Bank of America CEO Brian Moynihan told Yahoo Finance that Bank of Americas sidelining of crypto was not by choice.

Read more: Will This be The Year Crypto Gets Mention in Banks 10-Ks?

The reality is that we can’t do it, Moynihan said. By regulation, we are not really allowed to engage.

New PYMNTS Study: How Consumers Use Digital BanksA PYMNTS survey of 2,124 US consumers shows that while two-thirds of consumers have used FinTechs for some aspect of banking services, just 9.3% call them their primary bank.

Sign up for our daily newsletter.

You have successfully joined our subscriber list.

Were always on the lookout for opportunities to partner with innovators and disruptors.

Learn More

https://www.pymnts.com/news/fintech-investments/2022/report-fintech-cred-to-invest-in-p2p-lending-platform-liquiloans/partial/

See More In: Banks, Bitcoin, Crypto Assets, cryptocurrency, digital first banking, Digital Payments, News, SEC, TechREG, US Securities and Exchange Commission, What’s Hot

[ad_2]