Federal Reserve Chairman Powell: Custodied assets do not belong to the balance sheet

ChainCatcher news, according to Bitcoin.com, on Wednesday, Federal Reserve Chairman Jerome Powell testified before the House Financial Services Committee, where Congressman Josh Gottheimer questioned him about the SEC's Staff Accounting Bulletin (SAB) 121. This bulletin requires banks to include custodial digital assets on their balance sheets, significantly increasing the costs of providing digital asset custody services.

Gottheimer cited Powell's previous statement: custodial assets do not belong on the balance sheet, and this has always been the case. Powell generally confirmed this position but did not comment on the SEC's policy, stating that it falls within the SEC's jurisdiction.

Critics argue that SAB 121 undermines banks' ability to provide secure digital asset custody, pushing these services toward less regulated entities and increasing consumer risk. Lawmakers have proposed overturning SAB 121, citing its negative impacts. Although Congress passed the first standalone cryptocurrency legislation to overturn SAB 121, President Biden vetoed the bill, emphasizing the need to establish a regulatory framework for digital assets.