US lawmakers push back on the SEC's crypto asset regulation with a proposed repeal of SAB 121.
According to Cointelegraph, US Representatives Mike Flood and Wiley Nickel, along with Senator Cynthia Lummis, have introduced resolutions to overturn the Securities and Exchange Commission's (SEC) Staff Accounting Bulletin 121 (SAB 121). This effort by US lawmakers is in response to the bulletin's limits on banks that want to hold their clients' bitcoin assets on their balance sheet.
The resolution, introduced under the Congressional Review Act on February 1, 2023, would publicly dispute the accounting regulation and declare that it has no legal standing.
SAB 121 has been chastised for its stance that banks must bear the capital-intensive obligation of maintaining their clients' crypto assets on their balance sheets. Lawmakers say that this provision inhibits regulated institutions from functioning as crypto custodians and creates an unfair divide by treating crypto assets differently than traditional holdings.
The opposition to SAB 121 persisted in November 2023, when multiple Congress members sent a memo to significant financial institutions, including the Chair of the Board of the Federal Deposit Insurance Corporation. The memo requested clarification and questioned the enforceability of the Government Accountability Office's (GAO) findings.
The GAO confirmed that a congressional review of SAB 121 is appropriate. This comes after Senator Lummis wrote a letter to the US Comptroller General in August 2022, querying if the bulletin qualifies as a rule under the Congressional Review Act.
Lummis expressed worries about the potential constraints that the SAB 121 rule may have on consumer protection and financial institutions' ability to safely protect Americans' financial assets.
Representative Mike Flood criticised the SEC's unilateral implementation of SAB 121, arguing that Congress should act to prevent regulatory agencies from overstepping their authority.
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