This joint resolution focuses on the repeal of SAB 121, which has attracted significant criticism from the crypto industry.
The SEC's accounting bulletin requires companies to list customers' crypto assets as liabilities on their balance sheets.
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Posted on February 2, 2024 at 1:15 PM EST.
Lawmakers on Thursday slammed the Securities and Exchange Commission's accounting standards for virtual currency custodians in a joint resolution aimed at overturning them.
A bipartisan group of Sen. Cynthia Lummis (R-Wyo.), Rep. Mike Flood (R-Neb.), and Rep. Wiley Nickel (D.N.C.) has proposed a resolution aimed at eliminating the staff. was submitted to the House of Representatives and the Senate. Accounting Bulletin (SAB) No. 121 takes effect in April 2022 and requires crypto custodians to report liabilities and “corresponding assets” on their balance sheets. This essentially requires companies to record customers' crypto assets as liabilities on their balance sheets and maintain sufficient equity to reflect the value of those assets. Traditionally, banks and other companies have been able to treat stored real estate as “off-balance sheet.”
“SAB 121 has had a significant impact, and the SEC should have received feedback from federal banking regulators and the public before implementing this legally binding directive,” Sen. Cynthia Lummis said in a statement. ” he said. “I have grave concerns about the impact this bulletin will have on consumer protection and ensuring that well-regulated financial institutions can safely store the hard-earned financial assets of Americans. .”
Critics of the rule argue that it differs from long-standing practice and prevents banks and other institutions from storing digital assets.
In October 2023, the Government Accountability Office (GAO) found SAB 121. should be considered as a rule Under the Congressional Review Act, the SEC was required to submit a report on this rule to the House and Senate, with a public comment period.
However, the SEC says the SAB is not a rule and is used only as an interpretive guide by regulator staff. This breaking news angered one of his SEC commissioners, Hester Pierce. called breaking news “It’s yet another manifestation of the Securities and Exchange Commission’s disjointed and ineffective approach to virtual currencies.”
Industry reaction
Industry groups welcomed the joint resolution.
“The implementation of SAB 121 places severe limits on the ability of banks and other trusted custodians to manage digital assets.” Said Industry group the Digital Chamber of Commerce said in a statement. “This not only increases the risk for consumers to invest in digital assets, it also increases the financial burden and makes it more difficult for consumers to engage in digital assets safely.”
The American Bankers Association said in a statement that the bulletin “represents a significant departure from long-standing accounting treatment for assets under custody and threatens the banking industry's ability to provide customers with safe and sound custody of digital assets.” ” he said.
Like any bill, a joint resolution must pass the House and Senate before being signed by the president.
