The U.S. Securities and Exchange Commission (SEC) has removed a hurdle that had kept U.S. banks and Wall Street investment firms from adopting Bitcoin (BTC) and other cryptocurrencies.
Invest with Confidence:
- Follow TipRanks' Top Wall Street Analysts to uncover their success rate and average return.
- Join thousands of data-driven investors – Build your Smart Portfolio for personalized insights.
Following aggressive lobbying by the crypto industry, the SEC has eliminated an accounting rule that forced banks to treat Bitcoin and other cryptos as liabilities rather than assets on their balance sheets. The rule was a major deterrent to banks and Wall Street firms owning Bitcoin. But now, the SEC, under the new Trump administration, has made it easier for U.S. financial firms to deal in crypto.
The rule that has been removed, called “Staff Accounting Bulletin 121,” or “SAB 121” for short, was introduced in 2022 and subjected digital coins and tokens to strict capital requirements. The measure significantly raised the risks of offering crypto custody services and discouraged widespread adoption of cryptocurrencies on Wall Street.
More Favorable Environment
Former U.S. President Joe Biden had vetoed past efforts to revoke SAB 121, discouraging banks from adopting crypto. Banks have, until now, been limited from expanding their crypto offerings beyond derivatives trading and offering exchange-traded funds (ETFs) through their wealth management units.
Recently, Goldman Sachs (GS) CEO David Solomon said on CNBC that from a regulatory perspective, his investment bank couldn’t own Bitcoin, but that the firm would revisit the issue if the rules changed. The CEOs of fellow Wall Street firms Morgan Stanley (MS) and Bank of America (BAC) made similar comments about expanding their crypto offerings if the rules governing digital assets were to change.
BTC has risen nearly 150% in the last 12 months.
Is BTC a Buy?
Most Wall Street firms don’t offer ratings or price targets on Bitcoin, so we’ll look at the cryptocurrency’s three-month performance instead. As one can see in the chart below, the price of BTC has risen 49.83% in the last 12 weeks.
