The U.S. Securities and Exchange Commission (SEC) has removed a hurdle that had kept U.S. banks from adopting Bitcoin (BTC) and other cryptocurrencies.
The Wall Street regulator has eliminated an accounting rule that forced banks to treat Bitcoin and other crypto as liabilities rather than assets on their balance sheets.
The rule had been a major deterrent to banks and Wall Street firms owning crypto. But now, the SEC has made it easier for American financial firms to deal in digital assets.
The rule that’s been removed, called “Staff Accounting Bulletin 121,” or “SAB 121” for short, was introduced in 2022 and subjected digital coins and tokens to strict capital requirements.
The measure raised the risks of offering crypto custody services and discouraged widespread adoption of cryptocurrencies on Wall Street.
Former U.S. President Joe Biden vetoed previous efforts to revoke SAB 121, discouraging banks from adopting crypto.
As such, banks, until now, had been limited from expanding their crypto offerings beyond derivatives trading and exchange-traded funds (ETFs).
Recently, Goldman Sachs (GS) CEO David Solomon said that regulations prevented his investment bank from owning Bitcoin, but that the firm would revisit the issue if the rules changed.
The CEOs of fellow Wall Street firms Morgan Stanley (MS) and Bank of America (BAC) made similar comments about expanding their crypto offerings if the SEC’s rules changed.
Bitcoin is currently trading at $102,700 U.S., having risen 144% in the last 12 months.
