Not much has changed in statutory guidance since the release of INT 21-01T Cryptocurrencies in early 2021. Aside from adding additional questions to 2022 general interrogatories to improve the transparency of crypto transactions, we are unaware of further statutory activity on the subject.
Current guidance in INT 21-01 clarifies that cryptocurrencies do not meet the definition of cash when directly held and should be classified as non-admitted assets in accordance with SSAP No. 4 – Assets and Nonadmitted Assets. This clarification, however, does not impact the direction for investments in funds that may hold cryptocurrencies via SSAP No. 30R – Unaffiliated Common Stocks, SSAP No. 48 – Joint Ventures, Partnerships and Limited Liability Companies, or SSAP No. 97 – Investments in Subsidiary, Controlled and Affiliated Entities. The NAIC staff did not suggest future modifications be made to SSAP No. 30R, SSAP No. 48, or SSAP No. 97 to restrict cryptocurrencies in funds or through indirect ownership such as SCAs or partnerships.
It’s worth noting that in 2022, the federal government took initial steps to create legislation around cryptocurrencies. A first step in establishing a framework to regulate the cryptocurrency market was placed on the U.S. Senate congressional table via bipartisan legislation called The Responsible Financial Innovation Act (the Act). The objective of the bill is to define and classify digital assets and then assign a federal agency home for their oversight. Senators Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-NY) introduced the bill in June 2022 to provide formal regulatory oversight of the crypto market.
The proposed legislation offers new oversight information but is not anticipated to change the SAPWG direction with respect to the current accounting treatment.
Deeper dive on this topic:
Click here to read more about this topic.