Leading Republican senators are calling for the blocking of SEC regulations regarding crypto accounting that were released in April 2022, adding to the already harsh criticism of the SEC’s overreach in regulating cryptocurrency assets.
Will SAB 121 of the US SEC Be Blocked?
The Staff Accounting Bulletin (SAB) 121 was published by the SEC on April 11, 2022, with the initial goal of streamlining the way banks and other financial organizations account for cryptocurrency holdings. The US House Financial Services Committee chairman, Patrick McHenry, among others, has vocally opposed the rule’s “harmful” aspects. According to McHenry, the US SEC did not follow the “normal process of federal rulemaking” and a Congressional investigation is therefore necessary.
Chairman McHenry and Senator Cynthia Lummis issued a statement saying,
“SAB 121 clearly overreaches the authority of the U.S. SEC and severely harms consumers.” Prudent regulators and the general public provided little feedback when SAB 121 was being developed, and Congress must immediately act to stop this detrimental rule.
The Republican legislators pointed out that the regulation discourages businesses from disclosing the amounts of cryptocurrency assets they have on hand. They said that by doing this, organizations and businesses would be unable to provide custodial services, depriving Americans of access to safe and secure asset custody. To create a stablecoin regulatory framework, the House Financial Services Committee has been promoting the Clarity for Payment Stablecoins Act of 2023 recently.
2022 Coinbase Flagged Risk
Based on the SEC’s SAB 121 requirement, cryptocurrency exchange Coinbase identified a “new risk factor” in May 2022. It had, however, made it clear at the time that it was not in danger of going bankrupt. The Commission included guidelines for companies like Coinbase that store cryptocurrency assets in its April 2022 bulletin for its clientele. The type and quantity of cryptocurrency assets should be disclosed in plain language in the company’s financial accounts, as required by law. The privacy of customer data may potentially be jeopardized by this.