Fed Chairman Powell reiterates: Custodial assets are not part of the balance sheet

On Wednesday, Federal Reserve Chairman Jerome Powell testified before the U.S. House Financial Services Committee, and Congressman Josh Gottheimer asked him about the U.S. SEC's Staff Accounting Bulletin (SAB) 121. The bulletin requires banks to include custody digital assets on their balance sheets, which greatly increases the cost of providing digital asset custody services. Gottheimer cited Powell's previous statement: custody assets are not on the balance sheet and have always been so. Powell generally confirmed this position, but did not comment on the U.S. SEC's policy, saying that this is the purview of the U.S. SEC. Critics believe that SAB 121 weakens banks' ability to provide safe digital asset custody, pushes these services to less regulated entities, and increases consumer risks. Lawmakers proposed to overturn SAB 121, citing its negative impact. Although the U.S. Congress passed the first stand-alone crypto legislation to overturn SAB 121, President Biden vetoed the bill, emphasizing the need to establish a digital asset regulatory framework. (Bitcoin.com)