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President Donald Trump has officially overturned a contentious guideline from the U.S. Securities and Exchange Commission (SEC), paving the way for American banks to custody cryptocurrency assets.
The rescinded rule, known as Staff Accounting Bulletin 121 (SAB 121), required banks to report crypto assets held on behalf of customers as liabilities on their balance sheets. This guideline, widely criticized by crypto proponents, was previously vetoed by President Biden despite bipartisan Congressional support.
A Landmark Decision for Crypto Custody
The elimination of SAB 121 is a significant milestone for the crypto industry:
- Enhanced Institutional Participation:
With the removal of regulatory barriers, major financial institutions like Bank of America and Morgan Stanley are poised to integrate cryptocurrency services into their offerings.- Bank of America CEO Brian Moynihan stated, “If the rules come in and make it a real thing you can do business with, the banking system will come in hard on the transactional side of it.”
- Morgan Stanley CEO Ted Pick echoed similar sentiments, emphasizing the bank’s commitment to working with regulators to offer crypto services in a “safe way.”
- Streamlined Regulations:
The rule change is expected to encourage more banks to adopt blockchain technology and provide crypto-related financial services, such as custody solutions, payments, and trading platforms.
Trump’s Pro-Crypto Stance
President Trump’s decision aligns with his broader commitment to supporting the digital asset industry. During his campaign, he pledged to create a more favorable environment for cryptocurrencies, contrasting sharply with the previous administration’s regulatory crackdown.
- Meme Token Launch:
In a controversial move, Trump recently launched a meme token on Solana, trading under the ticker TRUMP. The token, which saw volatile trading, now boasts a market cap of $7.5 billion, highlighting the cultural and economic impact of meme coins within the crypto space.
Industry Reactions
The banking sector has shown renewed interest in cryptocurrencies following the policy change:
- Bank of America:
Moynihan highlighted the bank’s readiness to adopt crypto for payments, noting that they have been studying blockchain technology for years. - Morgan Stanley:
The bank, which already offers Bitcoin ETFs to clients, is exploring broader involvement in the crypto industry while maintaining compliance with regulatory frameworks.
Implications for the Crypto Market
The repeal of SAB 121 is expected to have far-reaching effects:
- Increased Adoption:
- Banks can now safely offer crypto custody and payment solutions, fostering institutional and retail adoption.
- Market Growth:
- The decision is likely to attract more investment into the crypto market, boosting the legitimacy of digital assets.
- Policy Clarity:
- By working collaboratively with regulators, financial institutions can ensure compliance while innovating in the blockchain space.
Impact
President Trump’s elimination of SAB 121 is a monumental step for the U.S. crypto industry. By removing a key regulatory hurdle, the administration has opened the door for banks to integrate crypto services, signaling a new era of institutional participation in the digital asset ecosystem.
