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Highlights
- Rep. Mike Flood is advocating for the revocation of the SAB 121 policy.
- The SAB 121 regulation, spearheaded by SEC Chairman Gary Gensler, is seen as an obstacle for the crypto community.
- On Thursday, the House of Representatives will decide on the fate of this regulation.
In a pivotal turn of events, the fate of the Security and Exchange Commission’s Staff Accounting Bill (SAB) 121 hangs in the balance. Currently, the House of Representatives is gearing up for a decisive vote on May 9, 2024. The proposed repeal, led by Representative Mike Flood, is poised to shake the foundation of digital asset regulation.
The House To Decide On Repeal Of Gary Gensler’s SAB 121
Rep. Flood is fervently advocating for the passage of H.J. Res. 109. In a post on X, Flood revealed that the House is going to vote on whether to pass the repeal of SEC Chair Gary Gensler’s SAB 121 policy. Furthermore, he declared, “It’s time to pass H.J. Res. 109! #RepealSAB121,” setting the stage for a contentious showdown within the House of Representatives.
SAB 121, enacted in April 2022, mandates digital asset custodians to report liabilities and corresponding assets for all custodied cryptocurrencies on their balance sheets. The measure, spearheaded by SEC Chairman Gary Gensler, aims to mitigate the “significant risks and uncertainties associated with safeguarding crypto assets.”
However, dissenting voices have emerged, led by Committee members Mike Flood and Wiley Nickel. They argue that SAB 121’s implementation circumvented proper protocol. Moreover, Rep. Flood underscored the oversight in the issuance process.
He stated, “The SEC issued SAB 121 without conferring with the prudential regulators who are the experts on regulating bank custody.” Echoing these sentiments, Senator Cynthia Lummis emphasized the necessity for adherence to established regulatory procedures, as highlighted in a report by the Government Accountability Office. The report, issued in October 2023, underscored deficiencies in the issuance process, fueling calls for the repeal of SAB 121.
Also Read: Crypto Regulation: CFTC Chair Predicts More Crackdowns In 6-24 Months
House Of Financial Services Passes Resolution
Amidst the fervent debate, proponents of the resolution contend that SAB 121 encourages consumer protection measures. Rep. Maxine Waters, a staunch advocate for regulatory safeguards. He asserted, “Efforts like SAB 121 help prevent fraud.” Citing the collapse of FTX as a cautionary tale, Rep. Waters underscored the imperative of safeguarding investor interests against potential mishandling of crypto assets by custodians.
However, on February 29, the resolution, emerging victorious in a narrow committee vote of 31-20 in the House of Financial Services, garnered support from both sides of the aisle. Notable Democratic proponents include Reps. Wiley Nickel, Ritchie Torres, and Josh Gottheimer, underscoring the bipartisan nature of the contentious issue.
Nevertheless, the battle for the survival of the SEC’s SAB 121 is far from over. The resolution faces the formidable hurdle of securing approval in both the House and the Senate before the policy can be effectively discarded.
Also Read: Digital Chamber Slams SEC’s ‘Regulation by Intimidation’ Strategy
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