Federal Reserve Chair Jerome Powell testified before the U.S. House Financial Services Committee on Wednesday, facing questions from Congressman Josh Gottheimer (D-NJ) about the SEC's Staff Accounting Bulletin (SAB) 121.

This bulletin requires banks to include digital assets held in custody on their balance sheets, thereby increasing the costs associated with offering digital asset custody services.

Gottheimer expressed concern over the financial burden this rule imposes on banks, potentially stifling innovation.

Powell reaffirmed the Fed's stance on maintaining transparency and stability in financial systems, emphasising the importance of accurately reporting custody assets.

The controversy surrounding SAB 121 has sparked a broader debate on how digital assets should be regulated and reported.

As more financial institutions venture into the realm of digital assets, the implications of new regulations are closely scrutinised by industry experts and lawmakers alike.