Travis Hill, the Vice Chair of the Federal Deposit Insurance Corporation (FDIC), has aired a lot of criticism concerning the Securities and Exchange Commission’s (SEC) crypto accounting guidelines. He gave his comments during a speech at an event organized by the Mercatus Center, dedicated to the subject of tokenization. The critique is based upon the SEC’s Staff Accounting Bulletin (SAB) 121, which requires that firms that custodian cryptocurrencies to record the crypto holdings of their customers as liabilities on their balance sheet.
Departure from Traditional Custodian Practices
Hill noted that SAB 121 indicates a major departure from the existing custodian accounting practices. Custodial assets in financial institutions have been traditionally excluded from their balance sheets but regarded as the customers’ proprietary assets. The treatment ensures that ownership rights and financial liability are clear.
Nevertheless, under SAB 121, cryptos under custody would be consider
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