Reuters reports major US banks pausing crypto lending plans amid challenging SEC guidelines

The US Securities and Exchange Commission (SEC) guidance on crypto custody might impede banks from the industry because of the cost of implementation, Reuters reported on Sept. 16.

According to the report, the SEC accounting guidelines stated that public companies holding crypto assets on behalf of their clients must account for such assets as liabilities because of the high level of risks associated with the industry.

That guidance, however, poses a major problem for banks looking to offer crypto custody services.

Banking regulations include strict capital rules, which require banks to hold cash against all liabilities on their balance sheets.

Banks trying to offer crypto custodial services for their clients would need more cash at hand as the crypto assets will be reported as liabilities. That might prove too costly for many of these banks, forcing them to suspend their plan of crypto product offerings.

So far, banks like Bancorp and State Street are reconsidering their digital assets offering due to the costs.

Head of State Street Digital, Nadine Chakar, said:

“We do have an issue with the premise of doing that because these are not our assets. This should not be on our balance sheet.”

A Bancorp spokesperson revealed that the bank has stopped accepting new customers for its crypto custodial services due to regulatory requirements.

Reuters, citing anonymous sources, said the SEC did not consult banking regulators before issuing the guidance with one source stating,

“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.”

While the SEC has tried to justify its guidance several times, stakeholders like US Representative Trey Hollingsworth, American Bankers Association, the Bank Policy Institute, and the Securities Industry and Financial Markets Association have questioned it.

According to the lenders, the SEC is using its guideline to prevent banks from getting involved in crypto custodial services.

The post Reuters reports major US banks pausing crypto lending plans amid challenging SEC guidelines appeared first on CryptoSlate.

Share:

Share on facebook
Facebook
Share on twitter
Twitter
Share on pinterest
Pinterest
Share on linkedin
LinkedIn

Follow Us

Most Popular

Get The Latest Updates

Subscribe To Our Weekly Newsletter

No spam, notifications only about new products, updates.
On Key

Related Posts

Bitcoin above 20K AGAIN! Is Bitcoin Price Bullish Today?

The crypto market is moving still in a sideways trend. Trading cryptocurrencies is being favored by crypto enthusiasts rather than simply buying and holding. The reason for this is that consolidation phases are much more predictable thanks to technical analysis. Crypto traders are loving the current crypto dynamics in the market. After Bitcoin fell to

Breaking: Do Kwon Linked 3,313 Bitcoin To Be Seized? S. Korea Deepens Probe

Trouble for Do Kwon, Terra co-founder seems to be increasing after Interpol issued Red Notice against him. In the latest hit, South Korean authorities have moved on to deepen their probe against the alleged crypto fugitive. Do Kwon to lose his Bitcoins? According to reports, South Korean prosecutors are moving… Read more

Bitcoin Skyrockets As Stock Market Crashes, Is It Breaking Correlation

The crypto market is experiencing a surprise bounce. Bitcoin has rallied from the $18K-$19K range to cross the $20K mark. It has increased by over 5% in the last 24 hours and is currently trading at $20.1K.  However, since the stock markets are dumping, Bitcoin looks to break the correlation…. Read more

Bitcoin and Crypto Defy Wall Street Meltdown With Strong Rally

Wall Street started the week in a correction mode with all three top U.S. indices correcting 1% on Monday, September 26. However, Bitcoin and the broader crypto market have made a surprising move northwards with the BTC price shooting past $20,000 levels. With the recent BTC move, more than $14… Read more