The Securities and Stock Exchange Commission eliminated a controversial accounting rule that requires companies to record the crypts of property they hold for clients as obligations in their balance sheets, potentially opening the doors to traditional banks to enter the custody of the Crypto currency.
The abolition of the Bulletin on Staff Accounting 121 It indicates a turning point that could reshape the way financial institutions approach cryptocurrency, potentially leading to consolidation in the industry and expanding institutional crypto services outside Bitcoin and Ethereum, according to the experts in the industry.
“Several major guardians such as USBANK and BNY already ensure the administration of funds and custody of cash for the KRIPTO ETFs. BNY also has technical custody opportunities for Bitcoin and Ethereum,” Steven McClurg told ETF.com, executive director and founder Canary Capital.
The Sab 121 removal would allow traditional guardian providers to expand their KRIPTO ETF services globally, explained McClurg, adding that he expects to consolidate industry with cryptic companies such as gemini or anchorage that would potentially buy banks.
However, McClurg noticed that the transition would not happen overnight. Most banks will initially limit their guardian services to Bitcoin and Ethereum, which means that the next wave of potential crypts of ETFs-reconnecting those for XRP, Litecoin and Hbar-will probably have no support of bank custody when launching.
Although some ETF publishers could move their existing products to banks’ custody services for practicality, McClurg explained that “it will still take years for most banks to adapt to their own technological systems, but the merges and downloads would probably have accelerated.”
The regulatory change, listed in Staff Accounting Bulletin 122, requires companies to evaluate the obligations of cryptocurrencies according to wider accounting standards, such as the generally accepted accounting of US and the Guidelines of International Financial Reporting International Standards.
New guidelines enter into force for fiscal years starting after December 15, 2024, although companies can adopt changes earlier. SEC emphasized that companies must continue to provide clear posts on their custody obligations of cryptocurrencies according to existing requirements.
The change follows after a series of congress attempts to resolve accounting requirements. Bipartisan PROPOSAL OF THE LAW ON SAB 121 She received initial support in both homes last year, but was put on her by Veto President Joe Biden.
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