Custody accounting standards are rules for recording and reporting digital assets held for others. These standards provide guidelines for how financial institutions and other custodians must recognize, measure, and disclose digital assets under their care. They address specific challenges related to the unique characteristics of cryptocurrencies, such as ownership verification, valuation fluctuations, and the segregation of client assets. Clear standards are essential for financial reporting accuracy and investor confidence.
Context
The establishment of globally accepted custody accounting standards for digital assets is an ongoing challenge for accounting bodies and regulators. News frequently reports on new proposals or interpretations from organizations like the FASB and IASB as they strive to provide clarity for entities dealing with crypto holdings.
The SEC's SAB 121 rescission eliminates prohibitive balance sheet constraints, strategically clearing the path for institutional banking entry into digital asset custody.
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