Adrian JohnsonTLDR:
- Bipartisan lawmakers in the U.S. are seeking to repeal a Securities and Exchange Commission (SEC) accounting standard that places restrictions on crypto custodians.
- A joint resolution has been introduced in the Senate and House of Representatives to repeal SEC Staff Accounting Bill (SAB) 121.
A group of bipartisan lawmakers in the U.S. are pushing to overturn a Securities and Exchange Commission (SEC) accounting standard that imposes limitations on crypto custodians. Senator Cynthia Lummis, along with Representatives Wiley Nickel and Mike Flood, introduced a joint resolution in the Senate and House of Representatives to repeal the SEC Staff Accounting Bill (SAB) 121. The lawmakers argue that SAB 121 was issued without consultation with Congress or the Government Accountability Office (GAO), making it unenforceable. They believe that enforcing the rule would grant the SEC regulatory authority over institutions that Congress did not authorize.
SAB 121, enacted in March 2022, requires companies holding cryptocurrencies to report a liability and corresponding assets on their balance sheets. The American Bankers Association and the Securities Industry and Financial Markets Association (SIFMA) have criticized the rule for departing from long-standing accounting treatment for custodied assets and discouraging banks from providing custodial services for digital assets.
This move to repeal the SEC accounting standard comes amidst pushback from lawmakers and the judiciary on the SEC’s approach to crypto. In January, the SEC approved multiple spot Bitcoin ETFs in the U.S. following a court order. The regulator has also faced criticism over its interpretation of existing securities laws towards digital assets and its lawsuit against crypto firm Debt Box.
The lawmakers’ resolution seeks to challenge the SEC’s authority and address concerns about the impact of the accounting rule on custodians and the banking industry. The outcome of this repeal effort could have significant implications for the regulation of cryptocurrencies in the U.S.
