US lawmakers oppose SEC on crypto asset regulation

Members of the United States Congress want to remove Staff Accounting Bulletin 121 (SAB 121) from the US Securities and Exchange Commission (SEC). This announcement will restrict banks that want to hold their clients' cryptocurrency assets, requiring them to keep their investors' assets on their books.

Representatives Mike Flood, Willie Nickell, and Senator Cynthia Lammis have introduced a resolution under the Congressional Review Act to repeal the SEC's SAB 121 on February 1, 2023, which formally invalidates the accounting rule and concludes it is unconstitutional. force

Chairman @GaryGensler's SAB 121 prohibits banks from serving as custodians of digital assets. Today, @RepWileyNickel, @SenLummis and I introduced resolutions to rescind @SECGov's terrible ad.

SAB 121 days down – time to go! ️pic.twitter.com/jTQDdbMm3I

— Rep. Mike Flood (@USRepMikeFlood) February 1, 2024

SAB 121 specifies that bank customers' crypto assets must be kept on the bank's balance sheet, reflecting the value of the assets and requiring capital to be maintained on them. U.S. lawmakers have argued that it threatens the desire of regulated banks to act as crypto custodians and treats crypto holdings differently from other assets.

In the year In November 2023, several members of Congress, including the chairman of the board of the Federal Deposit Insurance Commission, submitted a memo urging key financial officials to take action to ensure that the SEC's SAB 121 is unenforceable following the Government Accountability Office's (GAO) finding.

Related: US lawmakers push back on proposed CFPB rule citing impact on crypto

The GAO concluded that congressional review of the SEC's SAB 121 is warranted, according to an August 2022 letter from Lamis to the US Comptroller General. The review is focused on determining whether the notice meets the requirements for classification as a rule under the Congressional Review Act.

Lummis expressed serious concern about how the SEC's SAB 121 bulletin will affect consumer protection and prevent well-regulated financial institutions from keeping America's hard-earned financial assets safe. She said:

“SAB 121 has far-reaching implications, and the SEC should have sought input from federal banking regulators and the public before implementing this legally binding guidance.”

In support of Loomis' statement, Flood criticized the SEC for issuing SAB 121 without consulting with prudential regulators or going through the notice and comment process required for such cases. He emphasized that Congress should not over-scrutinize what is reached by the regulator.

Magazine: Legislators' fear and skepticism fuel proposed crypto regulations in the US.