The U.S. Securities and Exchange Commission (SEC) is reportedly complicating matters for lenders in the crypto industry with some of its guidelines.
According to a report from Reuters, multiple large lenders from banks such as U.S. Bancorp, Goldman Sachs and JPMorgan Chase & Co are having trouble getting into the digital asset space because of the SEC’s policy on crypto lending.
Earlier this year, the SEC announced a set of guidelines that instructed crypto firms to start treating their users’ funds as their own liabilities on their balance sheets.
In the SEC’s bulletin from March 31st, it states:
“As long as Entity A is responsible for safeguarding the crypto assets held for its platform users, including maintaining the cryptographic key information necessary to access the crypto assets, the staff believes that Entity A should present a liability on its balance sheet to reflect its obligation to safeguard the crypto assets held for its platform users.”
According to Reuters, strict capital rules require banks to hold cash against liabilities on their balance sheet.
Reuters’ also sources say that this policy has thrown a “huge wrench” into the industry, and that lenders building out crypto offerings have had to cease moving forward with their plans pending any further action from the SEC and banking regulators.
Nadine Chakar, head of State Street Digital said,
“We do have an issue with the premise of doing that, because these are not our assets. This should not be on our balance sheet.”
A spokesperson from U.S. Bancorp tells Reuters the bank would still be servicing already existing clients in its Bitcoin custody service, but would be pausing all intake of additional clients while the company evaluates the regulatory situation.
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