Bitcoin (BTC) led surge had carried the entire crypto market closed to regain the crucial $2 trillion capitalization. However, reports have emerged that several powerful interest groups are urging the Securities and Exchange Commission (SEC) to revise accounting guidance. This comes in when BTC is thriving and moving ahead to breach its all time high of around $69,000.
SEC to change rules?
According to reports, the Bank Policy Institute, the American Bankers Association, the Securities Industry and Financial Markets Association, and the Financial Services Forum had asked the commission to get a re-check on some rules.
The accounting guidance asked to be revised includes the imposition of higher costs on US banks for holding digital assets for customers. The current guidance directs public companies, including banks, to treat crypto they custody as liabilities on their balance sheets. This leads to increased capital requirements.
The report mentioned that the traded group coalition had issued a letter to the US SEC. It holds specific charges like excluding certain assets from the broad crypto umbrella. This lists traditional assets recorded or transferred using blockchain networks and tokens underlying SEC-approved products like spot-Bitcoin exchange-traded funds.
However, the other ask is to exempt regulated lenders from the current balance sheet requirement. It will be done while maintaining the disclosure of crypto activities in financial statements.
What are the requests?
As per the group pushing this request, the existing guidance hinders regulated banking organizations from providing digital asset safeguarding services at scale. It added that this is already negatively impacting investors, customers, and the financial system. However, they highlight the need for changes to avoid a chilling effect on blockchain technology.
It is important to note that the US SEC chair Gary Gensler had defended the accounting guidance. He highlighted the unique risks and uncertainties associated with crypto assets.
The guidance, known as Staff Accounting Bulletin No. 121, has faced opposition from banks since its publication in 2022. Banks argue that it restricts them from scaling up crypto custodial services. This eventually makes it too costly and hinders their entry into the crypto custodian business.
Amid these regulatory challenges, Bitcoin’s market cap has surged to over $1 trillion to reach levels not seen since late 2021. The positive sentiment emerged after the growing success of US spot Bitcoin exchange-traded funds (ETFs). Guiding the surge, BTC reclaimed the $52,000 price level sending positive sentiments in the market.
