US securities regulator opens door for Wall Street banks to hold cryptocurrencies

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Wall Street’s securities watchdog has made it easier for banks to expand their cryptocurrency businesses by rescinding a Biden administration rule that made holding digital assets too expensive.

In one of the first pro-crypto movements Donald TrumpDuring its second SEC presidency, the SEC late Thursday reversed guidance known as SAB 121, which called for institutions to treat digital tokens held for customers as liabilities on balance sheets.

This shift confirms expectations that Trump will take a more welcoming approach to the digital assets sector, reversing the more skeptical stance taken by the Securities and Exchange Commission during… Joe Bidenadministration.

Major groups are already showing more serious interest in crypto assets and technologies, with BlackRock CEO Larry Fink this week calling on the Securities and Exchange Commission to “quickly approve” the ability of companies to create tokens backed by stocks and bonds.

In a sign of Trump’s more pro-crypto strategy, the president on Thursday also issued an executive order outlining his priorities regarding cryptocurrencies and calling on Cabinet-level officials to report back several months from now with recommendations on regulatory and legislative proposals.

While Trump’s pick to lead the SEC, Paul Atkins, is still awaiting confirmation by the US Senate, acting Chairman Mark Ueda and another Republican commissioner, Hester Peirce, have put the regulatory body on a more crypto-friendly path, forming a task force and dismantling the SAB. 121.

SAB 121 “created a punitive framework that effectively prevents U.S. banks from offering custody services for bitcoin and other cryptocurrencies,” said Mark Palmer, an equity research analyst at Benchmark. “Traditional banks will now be able to offer crypto custody services without facing actual penalties.”

Even before the SEC took action, major US banks were eagerly anticipating the ability to attract crypto customers, as Trump and his allies in the executive and legislative branches paved the way for digital assets.

“We want to have the ability to offer spot cryptocurrencies, and we expect that at some point, regulations around cryptocurrencies will allow us to do that,” Charles Schwab CEO Rick Wurster told analysts on the phone. this week.

The American Bankers Association and other industry lobbyists called on Biden last year to formally reject the SEC’s guidance after measures to do so passed both chambers of Congress in May 2024.

“This is a step in the right direction,” said Kevin Fromer, president of the Financial Services Forum, which represents the largest banks.

Brian Daly, an attorney at Akin Gump, noted that custodial services have been a “behind everything” for financial institutions when providing cryptocurrency services to clients. The old rule “made it impossible for all responsible banks, broker dealers and financial intermediaries that we rely on to be custodians of cryptocurrencies,” Daly said.

Bitcoin rose more than 1.5 percent on Friday to about $105,800, moving away from its all-time high of about $109,000.