But on March 31, the SEC said public companies that hold crypto assets on behalf of clients or others must account for them as liabilities on their balance sheets due to their technological, legal and regulatory risks. While the guidance applies to all public companies, it is especially problematic for banks because their strict capital rules, overseen by bank regulators, require them to hold cash against balance sheet liabilities. The SEC did not consult the banking regulators when issuing the guidance, according to four of the people. The SEC’s move complicates banks’ efforts to jump on the digital asset bandwagon, and could keep them on the sidelines even as they report increased demand from clients looking to access the burgeoning market. “This has thrown a huge wrench in the mix,” one of the sources said. Lenders building out crypto offerings have had “to cease moving forward with those plans pending any kind of further action from the SEC and the banking regulatory agencies,” they added. Custody banks State Street and BNY Mellon, which have been building digital asset offerings, are among those whose projects have been disrupted, according to three people with knowledge of the matter.
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