A bipartisan coalition of lawmakers has urged the Biden Administration to abandon its plan to veto the Congressional proposal to repeal the SEC’s controversial Staff Accounting Bulletin No. 121 (SAB 121).
The letter, dated May 30, called on the administration to urge the SEC to rescind the standard or sign the Congressional proposal to repeal the accounting standards into law.
The letter highlighted the potential risks posed to consumers and the financial sector by the current accounting treatment mandated for digital assets.
SAB 121, published on March 31, 2022, requires entities that safeguard digital assets for customers to consolidate these assets onto their balance sheets and provide specific disclosures.
According to the letter, this requirement diverges from the accounting treatment of other asset classes and potentially exposes consumers to heightened risks by discouraging regulated financial institutions from managing digital assets.
The lawmakers emphasized that the Government Accountability Office (GAO) has classified SAB 121 as a rule under the Administrative Procedure Act (APA) and the Congressional Review Act (CRA).
The letter criticized the SEC for bypassing the traditional notice and comment rulemaking process, which allowed the SEC to avoid a full commission vote and prevented stakeholders from providing input.
The letter highlighted that revisiting and rescinding staff accounting bulletins is within the SEC’s authority, citing that most over the past three decades have involved revisions or rescissions.
The lawmakers wrote that despite this precedent, SEC Chair Gary Gensler has remained steadfast in maintaining the guidance of SAB 121 to the industry’s detriment.
The letter’s signatories, which include Senators Cynthia Lummis and Representatives Patrick McHenry, Andy Barr, Tom Emmer, Mike Flood, French Hill, Dan Meuser, Wiley Nickel, and Ritchie Torres, argued that the bipartisan support for H.J.Res.109 — a resolution expressing congressional disapproval of SAB 121 — demonstrates widespread opposition to the rule.
The lawmakers urged President Biden to either sign the resolution into law or collaborate with the SEC to revoke the guidance. The letter stated:
“Congress has spoken: the SAB 121 CRA vote sent a clear, bipartisan message to the SEC that this misguided policy is harmful to consumers and staff guidance was not appropriate to impose policy changes and must be overturned.”
The lawmakers warned that if Chair Gensler continues to uphold SAB 121, the resolution disapproving the rule should be enacted into law or permitted to take effect.
The ongoing debate over SAB 121 reflects broader tensions regarding the regulatory treatment of digital assets and the role of financial institutions in managing these emerging financial instruments.
AJ, a passionate journalist since Yemen’s 2011 Arab Spring, has honed his skills worldwide for over a decade. Specializing in financial journalism, he now focuses on crypto reporting.
CryptoSlate is a comprehensive and contextualized source for crypto news, insights, and data. Focusing on Bitcoin, macro, DeFi and AI.
Stay ahead with crypto’s key news and insights. Delivered directly, every day.
Franklin Templeton is the first to announce a sponsor fee of 0.19% for the ETF.
Securitize CEO Carlos Domingo confirmed he would testify at the hearing on May 31 following speculation on social media.
Coinbase filed its closing brief on May 31, slamming the SEC for its refusal to provide regulatory clarity for the digital asset industry.
Bloomberg Senior ETF Eric Balchunas called an earlier mid-June launch a “long shot.”
Disclaimer: Our writers’ opinions are solely their own and do not reflect the opinion of CryptoSlate. None of the information you read on CryptoSlate should be taken as investment advice, nor does CryptoSlate endorse any project that may be mentioned or linked to in this article. Buying and trading cryptocurrencies should be considered a high-risk activity. Please do your own due diligence before taking any action related to content within this article. Finally, CryptoSlate takes no responsibility should you lose money trading cryptocurrencies.