Circle CEO Jeremy Allaire has criticized an SEC rule he believes is stifling cryptocurrency adoption in the banking sector. The rule, known as Staff Accounting Bulletin 121, requires banks to treat digital assets as liabilities, leading to higher capital requirements as well as increased accounting and auditing costs.
In an interview with Reuters, Allaire called the rule “punitive” for financial institutions and corporations, making it expensive and impractical for them to hold crypto on their balance sheets. While Circle, the issuer of USD Coin (USDC), has partnered with banks for its operations, Allaire suggests the rule significantly limits broader crypto adoption within the financial system.
Allaire is urging President Donald Trump to take swift action to repeal the rule, noting his hope that Trump, who has branded himself “crypto president,” will prioritize easing crypto-related regulations. Trump is expected to issue executive orders to address such issues, although the timeline remains uncertain.
Coinbase’s Chief Policy Officer, Faryar Shirzad, echoed similar sentiments, suggesting that the new administration is likely to encourage greater bank involvement in crypto custody services. Allaire also anticipates increased congressional activity around shaping the future of crypto regulations in the coming weeks.
With growing pressure from crypto leaders and advocates, the spotlight is now on whether regulatory changes can create a more favorable environment for banks to embrace digital assets.
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