Members of the US Congress, including Representatives Mike Flood, Wiley Nickel, and Senator Cynthia Lummis, are striving to revoke the Staff Accounting Bulletin 121 (SAB 121) issued by the US Securities and Exchange Commission (SEC). This contentious accountancy stipulation hampers banks intending to hold their clients’ cryptocurrency assets by mandating those assets remain on their balance sheet.
The aforementioned politicians have invoked the Congressional Review Act in their bid to rescind the SEC’s guidelines. If successful, it will be established that SAB 121 lacks legal potency. The current regulations insinuate that banks must retain customer’s cryptocurrency assets on their balance sheet, indicating the asset value and further necessitating capital preservation against these assets.
Furthermore, the lawmakers contend that these rules discourage authorized banks from serving as custodians of cryptocurrency and deem these holdings differently from other asset types. This argument was buttressed in a memo drafted in November 2023 by several Congress members, who entreated prominent financial authorities to either provide clear guidance or to establish that SAB 121 is unenforceable.
The memo was written following the Government Accountability Office (GAO) advocating for Congressional review of the aforementioned SEC directives. Senator Lummis conveyed major apprehension regarding consumer protection and the potential obstruction of regulated banks’ ability to securely guard American financial assets, stating, “SAB 121 has broad implications, and the SEC should have engaged federal banking regulators and the public for feedback before enforcing this directive.”
The Congressional bid to revoke SAB 121 has sailed on the wind of criticism against the SEC for implementing these guidelines without consulting financial regulators or observing the mandatory process of seeking public comment. Congressman Flood stated that Congress should serve as a watchdog against any overstepping by regulatory bodies.