A growing number of members in Congress have banded together in a quest to unshackle the United States Securities and Exchange Commission (SEC) from the chains of Staff Accounting Bulletin 121 (SAB 121). This stringent bulletin, known for restricting banks from housing their clients’ digital fortunes, has sparked a movement to abolish its hold on financial institutions.
In a bold move, Representatives Mike Flood (R-NE) and Wiley Nickel (D-NC) have joined forces with Senator Cynthia Lummis (R-WY) to introduce a resolution, utilizing the Congressional Review Act (CRA), to rid the SEC of SAB 121. This legislative effort, set to take effect on February 1, 2023, aims to officially denounce the accounting rule and deem it null and void.
In the realm of banking and crypto, SAB 121 stands as a ruler, declaring that a bank’s balance sheet must reflect the true value of their customers’ digital assets and maintain adequate capital against them. However, some American lawmakers are concerned that this standard may dissuade banks from offering custodial services for cryptocurrency, unfairly treating it differently from traditional assets.
Fast forward to November 2023, and the halls of Congress buzz with fervent discussions. A group of esteemed representatives have banded together to call upon key financial authorities, pleading for guidance or action to refute the applicability of SEC SAB 121. Their plea comes in the wake of a Government Accountability Office (GAO) finding, shining a new light on the contentious issue at hand.
After receiving a letter from Senator Cynthia Lummis in August 2022, the U.S. Comptroller General heeded her call and launched a congressional review of the SEC’s SAB 121. With the GAO’s conclusion that such a review was necessary, the spotlight now shines on the bulletin to determine if it truly deserves to be classified as a rule under the Congressional Review Act. Senator Lummis, driven by her grave concerns over the potential impact on consumer protection and the ability of financial institutions to safeguard Americans’ valuable assets, spearheaded this crucial investigation.
Congressman Flood voiced his support for Senator Lummis’ stance, lambasting the SEC for recklessly releasing SAB 121 without consulting prudential regulators or following the necessary notice-and-comment protocol. He passionately emphasized the crucial role of Congress in keeping regulators in check and preventing unwarranted overreach.
