The US Securities and Exchange Commission (SEC) is reportedly complicating matters for lenders in the crypto industry with some of its policies.
According to a report by Reuters, several major bank lenders such as US Bancorp, Goldman Sachs and JPMorgan Chase & Co are struggling to enter the digital assets space due to the SEC’s crypto lending policies.
Earlier this year, the SEC announced a series of guidelines directing crypto firms to start treating their users’ funds as their own liabilities on their balance sheets.
The March 31 bulletin of the SEC states:
“As long as Company A is responsible for protecting the crypto-assets held for its platform users, including maintaining the key cryptographic information required to access the crypto-assets, the staff believe that Company A has a liability in its balance sheet to reflect its commitment to protect crypto assets held for its platform users.”
Stricter capital regulations require banks to hold cash against liabilities on their balance sheets, according to Reuters.
Reuters sources also say that these policies have given the industry a “giant wrench” and that lenders building crypto offerings have had to shelve their plans pending further action from the SEC and banking regulators.
Nadine Chakar, Head of State Street Digital said:
“We have a problem with the premise of doing this as this is not our asset. That should not be on our balance sheet.”
A spokesman for US Bancorp told Reuters that the bank would continue to serve existing customers in its bitcoin custody service but would pause adding additional customers while the company assesses the regulatory situation.
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Featured image: Shutterstock/Marko Aliaksandr/Fotomay