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Highlights
- US legislators debate on the legality of SEC’s SAB 121.
- The crypto community continues to criticize the SEC’s policies on the market.
- On the flip side, the SEC cites investor protection to defend the policy.
Several United States legislators look to repeal the Securities and Exchange Commission (SEC) Staff Accounting Bulletin (SAB) 121, making it harder for traditional firms to offer crypto custody services.
In 2022, the SEC rolled out a new staff accounting bulletin requiring firms seeking to offer crypto services to hold assets on their balance sheet. This move faced an uproar from the crypto community as stakeholders flagged the stifling of the sector by the financial regulator.
To many commentators, this creates a huge burden on firms seeking to offer crypto services.
#HappeningNow: The House is debating @USRepMikeFlood's H.J.Res. 109, a CRA to nullify the @SECGov's disastrous Staff Accounting Bulletin 121.
📺 Tune in 🔗https://t.co/kTrdVi79Bu
— Financial Services GOP (@FinancialCmte) May 8, 2024
The Debate Continues On SAB 121
US legislators including Sen Cynthia Lummis, Rep Mike Flood, and Rep Wiley Nickel introduced resolutions to declare Gary Gensler’s move null and void. Today, lawmakers seek to give official disapproval of the SEC’s policies.
“Providing for congressional disapproval under chapter 8 of title 5, United States Code, of the rule submitted by the Securities and Exchange Commission relating to “Staff Accounting Bulletin No. 121”.
According to lawmakers and critics, the SEC should have passed through Congress before going forward with the policy. In a nutshell, they alleged the regulator used the guideline to set the new policy.
Rep Flood previously called it an overreach by Gary Gensler’s SEC. “The SEC issued SAB 121 without conferring with prudential regulators despite the accounting standard’s effects on financial institutions’ treatment of custodial assets, and the SEC issued SAB 121 without going through the notice-and-comment process.”
Gary Gensler Defends Policy
Gary Gensler and other SEC staff have backed SAB 121 highlighting the need to protect investors in the market. According to him, it addresses liabilities on a company’s balance sheet to protect user assets.
The implosion of FTX and other firms sparked a new approach to crypto regulations in the United States. While financial authorities justify present outcomes, crypto executives say the move is driving investment out of the country. Coinbase and other crypto firms are pushing for rule clarity in the United States.
Also Read: Ripple XRP News: Judge Torres To Deny SEC’s Motion In Remedies Phase
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