US banking institutions have urged SEC Chairman Gary Gensler to adjust the definition of cryptocurrency assets to facilitate their provision of custodial services for Bitcoin spot ETFs. With the decrease in selling pressure from Grayscale GBTC, major Bitcoin spot ETF issuers have increased their buying power, resulting in a boost for Bitcoin, which briefly surpassed the $52,000 mark, reaching a new high since December 2021.
The US banking industry urges the SEC to change the definition of cryptocurrency assets. We know that while the SEC approved 11 Bitcoin spot ETFs last month, it also allowed US-listed cryptocurrency exchange Coinbase to monopolize the BTC custodial services of institutions such as BlackRock and Grayscale.
In this context, on February 14, a trade group alliance composed of the American Bankers Association, the Institute of Bankers, the Financial Services Forum, and the Securities Industry and Financial Markets Association sent a letter to SEC Chairman Gary Gensler expressing their hope for US banks to participate in the custodial services of Bitcoin spot ETFs.
In addition, in order to compete for this custodial service, they also requested in the letter that the SEC consider revising Staff Accounting Bulletin (SAB) 121, issued in March 2022, hoping that the SEC can narrow the definition of cryptocurrency assets in the bulletin to enable banking institutions to have more opportunities to participate in the cryptocurrency field, such as serving as custodians for Bitcoin spot ETFs.
Commenting on the move by the US banking industry, Bloomberg ETF analyst Eric Balchunas summarized, “Banks are interested in joining digital finance.”
Matt Hougan, Chief Investment Officer of Bitwise, a Bitcoin spot ETF issuer, also agreed with this, stating, “The banks are realizing that this is a huge opportunity.”
However, TheBitcoin Therapist, author of the weekly Bitcoin news, revealed the sentiment of banking institutions more bluntly, stating, “Banks love Bitcoin only when they can control it.”
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