Federal Deposit Insurance Corporation Vice Chair Travis Hill sharply criticized the Securities and Exchange Commission's handling of a controversial crypto accounting guidance during a speech on Monday.

Hill, the FDIC's second-in-command, said that the SEC's Staff Accounting Bulletin 121, or SAB 121, diverges from current custodian practices. Released in March 2022, the bulletin requires firms that custody cryptocurrencies to record on their balance sheets their customers' crypto holdings as liabilities. 

"This treatment sharply departs from how custodians account for all other assets held in custody, which are generally held off balance sheet and treated as the property of the customer, not the custodian," Hill said on Monday at an event hosted by the Mercatus Center about …