As Inauguration Day approaches in the United States, the winds of change are blowing strong for the cryptocurrency industry. And those gusts may be felt most acutely not in the Oval Office, but in the halls of key regulatory agencies like the Securities and Exchange Commission (SEC) and Federal Deposit Insurance Corporation (FDIC). With a slate of Trump-aligned officials poised to take the reins, controversial policies that have hindered crypto’s integration with the traditional banking system appear to be squarely in the crosshairs.
Front and center is the SEC’s divisive Staff Accounting Bulletin No. 121 (SAB 121), an accounting standard that the digital assets sector argues has driven a wedge between it and the banking industry. The policy demands that banks treat customers’ crypto holdings as their own assets, absorbing them onto balance sheets and taking a substantial hit to their capital requirements. It’s a stance that has made large financial institutions extremely wary of diving into crypto.
New SEC Guard, New Rules
But SAB 121’s days may be numbered. Trump’s presumptive pick to chair the SEC, former Commissioner Paul Atkins, is a fierce critic of the bulletin. While the formal appointment and confirmation of Atkins could take some time, the SEC will be in Republican hands effective January 21, with sitting Commissioners Hester Peirce and Mark Uyeda – both former counsels to Atkins – expected to follow his lead. In a telling sign, the chief accountant who spearheaded SAB 121, Paul Munter, just announced his retirement effective next week.
An SEC helmed by Atkins or either current Republican commissioner could quickly move to rescind the accounting standard, immediately alleviating the pressures on banks looking to custody crypto or provide related services. It’s a step that would have widespread ramifications for the industry’s access to the mainstream financial system.
FDIC Shakeup
Similar sea changes are afoot at the FDIC. With the departure of longtime Chair Martin Gruenberg, Trump-aligned Vice Chair Travis Hill is set to take command. Hill has been openly critical of what he sees as the FDIC’s antagonistic stance toward crypto, arguing the agency “stifled innovation” and fueled a misperception that it’s “closed for business” when it comes to blockchain and distributed ledger technology.
I continue to think a much better approach would have been — and remains — for the agencies to clearly and transparently describe for the public what activities are legally permissible and how to conduct them in accordance with safety and soundness standards.
– Travis Hill, FDIC Vice Chairman
With Hill at the helm, the FDIC is expected to rapidly advance proposals to clarify banks’ ability to engage in crypto activities and establish firm deadlines for the agency to approve such endeavors. It’s a far cry from the chilly reception the industry has faced in recent years.
OCC and Federal Reserve in Play
The zeal for change is rippling through other critical banking regulators as well. The Office of the Comptroller of the Currency (OCC), which has been under interim leadership for over three years, is due for a Trump appointee who could revive the crypto-friendly initiatives championed by former Acting Comptroller Brian Brooks. Meanwhile, turnover at the Federal Reserve, including the impending exit of supervision chief Michael Barr, opens the door for a vice chair more amenable to banks wading into digital assets.
From the White House to the Statehouse
None of this is to say the White House will be a mere spectator. Expect a flurry of executive orders and directives from President Trump aimed at signaling his administration’s stance on crypto. But the real action – the concrete steps that could tear down the barriers between crypto and banking – will happen at the regulatory level.
For a crypto industry long stymied by stringent accounting rules and skittish banks, the stars appear to be aligning. With Republicans poised to put their stamp on the SEC, FDIC and other key agencies, the path may soon be cleared for a far more hospitable banking environment. The first dominoes are set to fall, and the cascading impacts could reshape crypto’s place in the wider financial ecosystem for years to come.
