HFS Representatives Propose Bipartisan Bill on Custody of Crypto
House Financial Services Committee members Mike Flood (R-NE), Ritchie Torres (D-NY), French Hill (R-AR) and Wiley Nickel (D-NC) introduced the Uniform Treatment of Custodial Assets Act. The proposed legislation would prohibit financial institutions from including crypto assets held in their custody as a liability on their balance sheet.
In a Press Release, Representative Flood stated that the proposed legislation is aimed at rescinding the SEC Staff Accounting Bulletin No. 121 which provides that a custodian must take onto its books as both assets and liabilities the entire value of the crypto assets it holds (see previous coverage). Representative Flood added that the proposed legislation would "ensure that assets custodied by banks, credit unions and trusts are kept off-balance sheet in line with longstanding practice."
In a Letter to House Financial Services Committee Chairs Patrick McHenry (R-NC) and Maxine Waters (D-CA), SIFMA expressed support for the proposed legislation stating that it is a "commonsense and bipartisan solution to a problem manufactured by the SEC." SIFMA argued that the proposed legislation would prevent the SEC from requiring banks to recognize digital assets as liability on their balance sheets and "restore the ability for banks to provide digital asset-related custody services for their clients."
On October 4 at 2 pm (EDT), representatives from Fried Frank, Morrison Cohen and DLx Law will host a complimentary webinar on recent CFTC enforcement actions against three protocols that facilitated the trading of digital assets and the legal impact for the crypto industry. This program has been approved in accordance with the requirements of the New York State CLE Board for a maximum of 1.0 credit hour in Professional Practice.
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