The chairman of the House Financial Services Committee, Patrick McHenry, R-N.C., stated that he wants to see a bill rescinded that establishes specific accounting guidelines for companies that own cryptocurrency.
Reps. Mike Flood, R-Neb., and Wiley Nickel, D-N.C., along with Sen. Cynthia Lummis, R-Wyo., introduced a joint resolution on Thursday to thwart the SEC’s Staff Accounting Bulletin No. 121, or SAB 121. According to the notice, companies that hold cryptocurrency must list customer holdings as liabilities on their balance sheets.
SAB 121 “undermines consumer protection and leaves customers’ digital assets vulnerable,” McHenry stated on X on Thursday. “There is bipartisan agreement,” the host stated. “I look forward to getting this measure across the finish line to overturn it.”
Having been supportive of cryptocurrencies, McHenry has spearheaded several attempts to move measures pertaining to them forward and is influential as the head of the House Financial Services Committee, which oversees the SEC.
Since its release in March 2022, SAB 121 has faced opposition from proponents of cryptocurrency, who have referred to it as “illogical.” Some others felt that it ought to have been implemented as a formal regulation. Gary Gensler, the chair of the SEC, has defended the bulletin, citing concerns for bankruptcy court clients.
An advocate group for banks, the Financial Services Forum, expressed its worries about the resolution in a statement on Thursday.
The forum stated, “The largest banks in the country are subject to the highest level of prudential requirements.” “Unfortunately, significant capital requirements contained in the SEC’s SAB 121 have effectively precluded banks today from being able to safely offer digital asset custody services.”
Lawmakers were anticipated to discuss SAB 121 in 2024 after the Government Accountability Office, which oversees the agency, stated in October that the guidance must legally be presented to Congress before it can take effect.
According to GAO, the bulletin is subject to the Congressional Review Act, which mandates that agencies report to Congress on the rule. Enacted in 1996, the CRA seeks to strengthen legislative control over agency rulemaking. That joint resolution was submitted under the CRA by lawmakers on Thursday.
On Thursday, Rep. Flood charged that the SEC had gone too far.
“The SEC issued SAB 121 without conferring with prudential regulators despite the accounting standard’s effects on financial institutions’ treatment of custodial assets, and the SEC issued SAB 121 without going through the notice-and-comment process,” Flood stated in a press release. “In the face of overreach by a regulator, it is the role of Congress to serve as a check.”