Source: US SEC allows some companies to be exempted from cryptocurrency accounting policy SAB 121

The U.S. Securities and Exchange Commission has opened a path for banks and brokerages to avoid reporting customer cryptocurrencies on their balance sheets. But companies must offset the risks posed by these assets to get around controversial cryptocurrency accounting guidance that has become a target of Congress. SEC staff has begun issuing guidance that some arrangements may not require reporting liabilities on their balance sheets under guidance issued two years ago, according to an SEC source familiar with the matter. Several large banks that have been in consultation with SEC staff since 2023 have been given permission to bypass balance sheet reporting to ensure that their customers' assets are protected in the event of bankruptcy or closure. Other measures, such as internal safeguards designed to better protect these assets, will address legal risks associated with the emerging asset class, the person said. It also said that the SEC believes that the guidance has worked and that companies have made adjustments to address the threats to investors from hacking and business failures. The SEC's accounting stance may expand the range of companies that U.S. cryptocurrency holders can choose to accommodate their growing portfolios. Banks say accounting treatment actually prevents them from offering crypto services because larger balance sheets will trigger capital requirements set by bank regulators, not the SEC. (Bloomberg Tax) Previous news, a majority of members of the U.S. House of Representatives voted against President Biden's support for the Securities and Exchange Commission's (SAB 121) crypto accounting policy, but fell short of the two-thirds vote needed to overturn the veto. SAB 121 requires banks to include customer crypto assets on their own balance sheets and increase bank capital requirements. Although the SEC is negotiating with the banking industry to revise the policy, Republicans are pushing for its revocation. The Blockchain Association believes that SAB 121 is a tool for the SEC to suppress digital assets. The Government Accountability Office determined that the SEC viewed the policy as guidance rather than formal rules, and Congress attempted to overturn it through CRA, but Biden vetoed it. Industry leaders met with lawmakers and White House representatives, calling on the Biden administration to adjust its position.