US banks will be able to store cryptocurrency: why is this important for the financial market
Date: 2025-01-31 Author: Oliver Abernathy Categories: CRYPTO PAYMENTS
This decision became possible after the repeal of the SAB 121 rule established by the US Securities and Exchange Commission (SEC), which limited their ability to provide cryptocurrency storage services. As Senator Cynthia Lummis notes, the repeal of this rule is an important step for the financial industry, since it slowed down the development and integration of digital assets into the traditional financial system.
The decision to repeal SAB 121 was made after Acting SEC Chairman Mark Uyeda announced the creation of a special working group to develop new, more transparent rules for the crypto market. SEC Commissioner Hester Peirce, known for her positive attitude towards crypto innovations and support for reasonable regulation of the crypto market, was appointed to lead this group. She even received the nickname "crypto mom" for her efforts in promoting progressive laws.
The repeal of SAB 121 opens up new opportunities for banks and brokers in the United States. VanEck analysts believe that financial institutions will now be able to store spot cryptocurrencies, which will significantly deepen their integration into traditional financial systems. In turn, Howard Lutnick, head of Cantor Fitzgerald, said that thanks to this decision, large financial companies will be able to more actively enter the cryptocurrency market, which will lead to the mass adoption of Bitcoin and other digital assets.
The SAB 121 rule was introduced in 2022 under the chairmanship of Gary Gensler. It required financial institutions that provide crypto asset storage services to account for these assets on their balance sheets. The SEC explained this decision by the need to protect cryptocurrency users from the risks associated with hacker attacks and the lack of deposit insurance, unlike traditional banking institutions.
However, such requirements significantly complicated the work of banks with cryptocurrencies. For example, if a bank was storing $10 billion worth of crypto assets for its clients, it would need to hold a corresponding percentage of the funds in liquid reserves, making it financially unprofitable to provide crypto custody services. This, in turn, led many banks to abandon crypto custody services.
The repeal of SAB 121 removes this barrier and provides banks with the opportunity to offer more efficient and secure crypto custody solutions. This is an important change for the industry, as it will help financial institutions and investors gain greater confidence in cryptocurrencies.
