Federal Deposit Insurance Corporation Vice Chairman Travis Hill sharply criticized the Securities and Exchange Commission’s (SEC) handling of controversial cryptocurrency accounting guidelines in a speech Monday.
Hill, the FDIC’s second-in-command, said the SEC’s Staff Accounting Bulletin 121 (SAB 121) differs from current trustee practices. Announced in March 2022, this board requires businesses. that custody cryptocurrency We record our customers’ cryptocurrency holdings as liabilities on our balance sheet.
“This treatment is a significant departure from the way trustees account for all other assets held in custody, which are typically taken off the balance sheet and treated as property of the client rather than the trustee,” Hill said at an event hosted by the Mercatus Center on Monday. On tokenization, Hill has been nominated as a Republican member of the FDIC in 2022.
A bulletin board has been drawn. Last year, there was controversy in the cryptocurrency industry over concerns that it could prevent banks from storing digital assets. member of Congress advanced A resolution passed by the National Assembly last month to repeal this gazette. watchdog The SEC said it needs congressional approval before moving forward with SAB 121.
Hill also cited the effect of SAB 121 on the spot Bitcoin exchange-traded fund approved by the SEC earlier this year. Lawmakers said the notice would prevent banks from becoming custodians of the ETFs.
“It is worth asking whether it is in the public interest for one cryptocurrency exchange to provide custody services to most markets for approved Bitcoin exchange-traded products while heavily regulated banks are effectively excluded from the market,” Hill said on Monday. “There is,” he said.
The SEC’s definition of cryptocurrency is too broad and could include “tokenized versions of real-world assets.”
“I think this is a clear example of why it is generally constructive for agencies to seek public input before announcing major policy issues,” Hill said. “We believe it would be helpful to at least clarify that SAB 121 does not apply to the broader world of tokenized assets beyond blockchain native assets.”
Need more clarity
Hill said regulators should provide more clarity on digital assets, blockchain and distributed ledger technology.
“I appreciate that regulators have to be careful and thoughtful in their approach to these issues,” Hill said. “We need to do our homework and understand the implications of new technologies that could reshape banking.”
“There are significant shortcomings in the FDIC’s current approach, which has contributed to the public perception that the FDIC is closed for business if the agency is interested in anything to do with blockchain or distributed ledger technology,” Hill added.
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