The Federal Reserve chairperson reiterated that assets under custody are not part of the balance sheet

On Wednesday, Federal Reserve Chairperson Jerome Powell testified before the US House Financial Services Committee when Congressman Josh Gottheimer asked him about the Securities Exchange Commission's Employee Accounting Bulletin (SAB) 121, which requires banks to include digital assets in custody on their balance sheets, significantly increasing the cost of providing digital asset custody services.
Gottheimer cited Powell's previous statement that assets in custody do not belong on the balance sheet and have always been.
Powell generally confirmed that position, but did not comment on the Securities Exchange Commission's policy, saying it was the Securities Exchange Commission's remit.
Critics argue that SAB 121 undermines banks' ability to provide secure digital asset custody, pushing those services to less regulated entities and increasing consumer risk. Lawmakers have proposed overturning SAB 121, citing its negative impact. Although the US Congress passed the first independent crypto legislation to overturn SAB 121, President Biden vetoed the bill, emphasizing the need for a regulatory framework for digital assets.