US banking institutions have urged SEC Chairman Gary Gensler to adjust the definition of cryptocurrencies in order to facilitate their provision of custody 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 that briefly reached $52,000, its highest level since December 2021.
The US banking industry urges SEC to change the definition of cryptocurrencies. We know that while the SEC approved 11 Bitcoin spot ETFs last month, it also allowed US-listed cryptocurrency exchange Coinbase to monopolize BTC custody services for institutions such as BlackRock and Grayscale.
In this context, a trade group alliance composed of the American Bankers Association, the Bank Policy Institute, the Financial Services Forum, and the Securities Industry and Financial Markets Association sent a letter to SEC Chairman Gary Gensler on February 14, expressing their hope that US banks could participate in the custody services for Bitcoin spot ETFs.
At the same time, in order to compete for this custody service, they also requested in the letter that the SEC consider modifying Staff Accounting Bulletin No. 121, issued in March 2022, hoping that the SEC could narrow the definition of cryptocurrencies in that bulletin. This would enable banking institutions to have more opportunities for participation in the cryptocurrency field, such as serving as custodians for Bitcoin spot ETFs.
Regarding the actions of the US banking industry, Bloomberg ETF analyst Eric Balchunas summarized by stating that “banks are interested in joining digital finance.” Matt Hougan, Chief Investment Officer of Bitwise, a Bitcoin spot ETF issuer, also endorsed this view.
However, TheBitcoin Therapist, author of the weekly Bitcoin news, revealed the sentiment of banking institutions in a more straightforward manner.