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Wall Street’s securities watchdog made it easier for banks to expand their cryptocurrencies by overturning Biden administration rules that made it prohibitive to hold digital assets expensively.
In one of the first pro-crypto moves Donald TrumpAnother presidency, the Securities and Exchange Commission, late Thursday rescinded guidance known as SAB 121, which called for institutions to treat digital tokens they held for customers as liabilities on their balance sheets.
The shift underscores expectations that Trump will take a far more welcoming approach to the digital asset sector, reversing the more skeptical stance the SEC has taken during Joe BidenAdministration.
Major groups are already taking a more serious interest in crypto assets and technologies, with BlackRock boss Larry Fink this week urging the SEC to “quickly approve” the ability of companies to create tokens backed by stocks and bonds.
In a sign of Trump’s more supportive crypto strategy, the president also issued an executive order on Thursday outlining his cryptocurrency priorities and calling on government officials to report within months of recommendations for regulatory and legislative proposals.
While Trump’s pick to lead the SEC, Paul Atkins, is still awaiting US Senate confirmation, Acting Chairman Mark Uyeda and another Republican commissioner, Hester Peirce, have put the regulator on more cryptocurrencies, forming a task force and dismantling SAB 121.
SAB 121 “created a punitive framework that effectively prevented U.S. banks from offering custody services for Bitcoin and other cryptocurrencies,” said Mark Palmer, an equity research analyst at Benchmark Company. “Traditional banks will now be able to offer cryptocurrency services without facing de facto penalties.”
Even before the SEC took action, major U.S. banks were anxiously awaiting the prospect of suing cryptocurrency buyers as Trump and his allies in the executive and legislative branches eased the way for the digital asset.
“We want to be able to offer a crypto venue, and our expectation is that at some point the regulations around cryptocurrencies will allow us to do that,” Rick Wurster, CEO of Charles Schwab, told analysts on a call this week.
The American Bankers Association and other industry lobbyists last year urged Biden not to formally approve the SEC’s guidance after measures to do so passed both houses of Congress in May 2024.
“This is a step in the right direction,” said Kevin Frome, chairman of the Financial Services Forum, which represents the biggest banks.
Brian Daly, an attorney at Akin Gump, noted that custodial services are a “one-size-fits-all” for financial institutions when offering crypto services to customers. The old rule “basically made it impossible for all the responsible banks and broker-dealers and financial intermediaries that we rely on to be crypto custodians,” Daly said.
The price of Bitcoin rose more than 1.5 percent on Friday to around $105,800, just shy of its high of around $109,000.
