Bitrabo Editorial
In an important move for Bitcoin (BTC), the broader cryptocurrency landscape, and the banking sector, BNY Mellon has become the first banking institution to receive an exemption from the Securities and Exchange Commission’s (SEC) Staff Accounting Bulletin (SAB) 121.
This information was initially shared by Unchained during a recent public hearing of the Wyoming Select Committee on Blockchain, Financial Technology, and Digital Innovation.
Will Bitcoin and Crypto Adoption Surge?
During the hearing, Chris Land, general counsel for pro-Bitcoin Senator Cynthia Lummis, brought attention to BNY Mellon, the largest custodian bank in the United States.
Land confirmed that the SEC has relieved BNY from the stipulations of SAB 121, which requires financial entities holding cryptocurrencies to list these assets on their balance sheets and establish related liabilities.
According to Land, “BNY is aiming to expand its involvement in the crypto custody market”, indicating a major change in the bank’s approach to managing digital assets for institutions and an optimistic outlook for increasing Bitcoin adoption among clients.
Unchained also pointed out that BNY Mellon’s exemption might encourage other financial institutions to pursue similar endeavors. However, the guidelines of SAB 121 continue to pose challenges for banks regarding the accounting of Bitcoin and other cryptocurrencies on their financial statements.
Despite this, SEC chief accountant Paul Munter recently suggested that certain conditions could allow for exceptions, although specifics were not detailed in the report.
Industry Perspectives
BNY Mellon operates under the oversight of the New York Department of Financial Services (NYDFS) and the Federal Reserve, both crucial for its regulatory compliance and operations.
Land mentioned that the Federal Reserve would need to have approved BNY’s entry into the digital asset custody arena, although the exact details of this process remain unclear.
Wyoming’s Select Committee Chair Cyrus Western raised the question of whether BNY would have to apply for New York’s BitLicense, a necessary permit for cryptocurrency companies in the state. Land proposed that BNY might contend that federal banking regulations could bypass state laws like the BitLicense.
The exemption given to BNY has sparked concerns among other crypto entities such as Custodia Bank and crypto platform Kraken, who have voiced their frustrations over what they see as “regulatory favoritism” towards larger firms.
Western commented that while companies like Custodia Bank have complied with regulations and aimed for transparency, they feel overlooked in favor of bigger institutions like BNY.
On a positive note, Michael Novogratz, CEO of Galaxy Digital, expressed optimism that the SEC’s exemption could encourage more traditional banking institutions to explore cryptocurrency opportunities. This view is echoed by BNY Mellon’s CEO Robin Vince, who recently discussed the bank’s plans for a more proactive approach to digital assets.
As of now, Bitcoin’s price sits at $63,000, showing a decrease of nearly 2% over the past 24 hours.
Featured image by DALL-E, chart via TradingView.com