H.R. 5741 — Introduced in House

I 118th CONGRESS 1st Session H. R. 5741 IN THE HOUSE OF REPRESENTATIVES September 27, 2023Mr. Flood (for himself, Mr. Torres of New York, Mr. Hill, and Mr. Nickel) introduced the following bill; which was referred to the Committee on Financial Services A BILL To prohibit certain Federal agencies from requiring certain institutions to include assets held in custody as a liability, and for other purposes. 1. Short title This Act may be cited as the Uniform Treatment of Custodial Assets Act. 2. Accounting treatment of custody activities (a) In general The appropriate Federal banking agency, the National Credit Union Administration (in the case of a credit union), and the Securities and Exchange Commission may not require or take supervisory action that would cause a depository institution, national bank, Federal credit union, State credit union, trust company, or any affiliate thereof— (1) except as provided in subsection (b), to include assets held in custody or safekeeping, or the assets associated with a cryptographic key held in custody or safekeeping, as a liability on such institution’s financial statement or balance sheet; (2) to hold additional regulatory capital against assets in custody, or safekeeping, or the assets associated with a cryptographic key held in custody or safekeeping, except as necessary to mitigate against operational risks under regulations with general application, as determined by— (A) the appropriate Federal banking agency or State bank supervisor; (B) the National Credit Union Administration (in the case of a credit union); or (C) a State credit union supervisor; or (3) to recognize a liability for any obligations related to activities or services performed for digital assets that such institution does not have beneficial ownership of if that liability would exceed the expense recognized in the income statement as a result of the corresponding obligation. (b) Exception for commingling Cash held for a third party by an institution described in subsection (a) may be treated as a liability on such institution’s financial statement or balance sheet if such cash is commingled with the general assets of such institution. (c) Definitions In this section: (1) Affiliate The term affiliate has the meaning given the term in section 2 of the Bank Holding Company Act of 1956 (12 U.S.C. 1841). (2) Credit union terms The terms Federal credit union and State credit union have the meaning given those terms, respectively, in section 101 of the Federal Credit Union Act (12 U.S.C. 1752). (3) FDIA terms The terms appropriate Federal banking agency, depository institution, and State bank supervisor have the meanings given the terms, respectively, in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813). (4) State credit union supervisor The term State credit union supervisor means a State official described in section 107A(e) of the Federal Credit Union Act (12 U.S.C. 1757a(e)).