- The Blockchain Breakthrough
- Posts
- A Power Player Wants in on Crypto
Hey everyone,
Government regulation remains one of the bigger risks for crypto, particularly in the US, where the government has a mixed record on being pro-crypto. But if there is one group that can sway the regulators in the US it’s the big banks. Recently their intentions became clear.
Over the last week there was activity related to an SEC regulation (SAB 121) which is generally viewed as an anti crypto rule. Here’s a quick history of this rule:
In 2022 the SEC created rule SAB 121
Congress recently tried to overturn the rule
This week Biden vetoed overturning the rule, to keep it in place
While all this was happening, we had an opportunity to watch the big banks reaction, and its clear…they want in on crypto bad.
What is SAB 121?
In 2022 the SEC had implemented a rule called SAB 121. This rule states that public companies that hold crypto assets need to have those assets recorded as both liabilities and assets on their balance sheets.
This is an unusual approach since banks hold non-crypto assets for customers and they don’t have to record them on their balance sheet.
The SEC says the rule reflects the risk the company takes on when holding customers crypto since the crypto could be lost to hackers.
What impact does this have on the big banks?
It keeps them out of the crypto business because when the assets they are holding for customers are put on their balance sheet there are large associated costs. Regulation requires them to hold a certain amount of money to offset risks on their balance sheet…and the amount specified for crypto would be enormous. So instead of investing that money in their business to grow it, it would have to be set aside to offset the risk of holding crypto for customers
The big banks don’t like this
The American Bankers Association (ABA) is the largest lobbying group for banks in the US. From their Tweet above, it’s clear they don’t like how it keeps the banks out of crypto.
If the banks don’t like how they’re being kept out of crypto…its safe to say they want in on crypto.
Longer term investment impact? Bullish
The big banks wanting in on crypto is a bullish sign. It indicates a growing acceptance and interest in the crypto market from major financial players. As these institutions push for more favorable regulations, it could pave the way for broader adoption and integration of crypto into the mainstream financial system. So, keep an eye out—big things could be coming.
Cheers,
Justin
P.S. Spending some time up in Boothbay Maine last week. Nice place. Would recommend checking it out if you’re looking for a place to get away from the heat and relax.
Want to show everyone you’re a crypto investing pro?
Investing pro’s need top tier market intelligence…and you can get that in this premium newsletter.
In this plan we tell you whether we’re buying, selling, or doing nothing with our crypto. Investing isn’t ever 100% sure, but the way we do things has worked over time.
It has helped us:
Buy near the bottom last cycle
Sell within 10% of the top last cycle
We also explain how we decided to buy, sell, or do nothing— we show our work, just like in math class.
Interested in getting this premium newsletter for free?
We’re giving a very limited number of readers free premium plan in exchange for feedback. Unfortunately we won’t be able to offer this all the time or to everyone.
If you’re interested in being considered, just let us know by responding to this email.
Don’t worry your response will only go to us, not everyone that subscribes to this newsletter
If you have any thoughts, feedback, or topics you’d like us to cover - feel free to respond to this email. Don’t worry, your response will only go to us not everyone that subscribes to the newsletter
Visit our website to see all prior articles:
Disclaimer: The Blockchain Breakthrough is not financial advice. Please do your own research.
Reply