Banks' cryptocurrency projects have been upended by U.S. Securities and Exchange Commission (SEC) accounting guidance that would make it too capital-intensive for lenders to hold crypto tokens on behalf of clients, according to more than half a dozen people with knowledge of the matter.
offer or are working on crypto products and services for clients in a bid to tap in to the $1 trillion crypto market, according to their public statements and media reports.
"This has thrown a huge wrench in the mix," one of the sources said. Lenders building out crypto offerings have had "to cease moving forward with those plans pending any kind of further action from the SEC and the banking regulatory agencies," they added. A spokesperson for BNY Mellon declined to comment on the status of its crypto custody project. “BNY Mellon believes digital assets are here to stay, and increasingly becoming part of the mainstream of finance," he added.
“We've 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,” U.S. Representative Trey Hollingsworth, who sent SEC Chair Gary Gensler a letter in July expressing concern about the guidance, said in an interview.
In a June letter to bank regulators, however, the Securities Industry and Financial Markets Association, American Bankers Association and the Bank Policy Institute said such risks are already mitigated by strict bank supervision and rules. Diogo Mónica, president of Anchorage Digital, said the capital cost was "completely unsupportable" and that "every single bank" Anchorage works with is now waiting on regulators before proceeding to work with Anchorage on crypto custody solutions.
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