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Bipartisan effort to scrap SEC’s crypto accounting policy gains momentum.

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TLDR:

– Bipartisan lawmakers in the US are seeking to repeal a Securities and Exchange Commission (SEC) accounting policy that restricts crypto custodians.
– Senator Cynthia Lummis and Representatives Wiley Nickel and Mike Flood introduced a joint resolution in the Senate and House of Representatives to overturn the SEC Staff Accounting Bill (SAB) 121.
– SAB 121 requires companies custodying cryptocurrency to report a liability and “corresponding assets” on their balance sheets, and has faced criticism from industry bodies for deviating from traditional accounting treatment.

A bipartisan group of US lawmakers have introduced a joint resolution in the Senate and House of Representatives seeking to repeal a Securities and Exchange Commission (SEC) accounting policy that places restrictions on crypto custodians. The resolution, introduced by Senator Cynthia Lummis, and Representatives Wiley Nickel and Mike Flood, aims to overturn the SEC Staff Accounting Bill (SAB) 121.

SAB 121, which was enacted in April 2022, requires companies that hold custody of cryptocurrency to report a liability and “corresponding assets” on their own balance sheets. The policy has been met with criticism from industry bodies, including the American Bankers Association, which believes it represents a “significant departure” from traditional accounting practices for custodied assets and threatens the ability of banks to offer safe custody of digital assets.

The lawmakers argue that the SEC had issued SAB 121 without consultation with Congress or the Government Accountability Office (GAO), making it “not enforceable.” They also contend that the policy gives the SEC regulatory authority over institutions for which Congress did not grant authorization.

This move to repeal the SEC accounting policy reflects ongoing tension between regulators and the crypto industry. The SEC has faced pushback on its approach to digital assets in recent months, including its approval of several spot Bitcoin exchange-traded funds and its interpretation of securities laws regarding crypto staking programs. The resolution to rescind SAB 121 suggests that lawmakers are seeking to exert more influence over regulatory decisions that affect the crypto sector.

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