SEC’s crypto stance throws wrench into industry lending markets: Report
The US Securities and Exchange Commission (SEC) is reportedly complicating matters for lenders in the crypto industry with some of its policies.
According to a report by Reuters, several major lenders from banks such as US Bancorp, Goldman Sachs and JPMorgan Chase & Co are having trouble entering the digital asset space due to the SEC’s policy on crypto lending.
Earlier this year, the SEC announced a set of guidelines that instructed crypto firms to start treating users’ funds as their own liabilities on their balance sheets.
The SEC’s bulletin from March 31 states:
“As long as Entity A is responsible for protecting cryptoassets held for its platform users, including maintaining the cryptographic key information necessary to access cryptoassets, the staff believes that Entity A should present a liability on its balance sheet to reflect its obligations . to protect crypto-assets held for the platform users.”
According to Reuters, strict capital rules require banks to hold cash against liabilities on the balance sheet.
Reuters’ sources also say that this policy has thrown a “huge wrench” into the industry, and that lenders building out crypto offerings have had to stop moving forward with their plans pending further action from the SEC and banking regulators.
Nadine Chakar, Head of State Street Digital said,
“We have a problem with the premise of doing that, because these are not our assets. This should not be on our balance sheet.”
A spokesperson from US Bancorp told Reuters that the bank will continue to serve existing customers in its Bitcoin custody service, but will stop all intake of additional customers while the company evaluates the regulatory situation.
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Featured image: Shutterstock/Marko Aliaksandr/Fotomay
