The US House of Representatives has one on May 8th resolution agreed to reject the Securities and Exchange Commission’s (SEC) cryptocurrency accounting guidelines. According to the industry, these policies discourage banks from servicing crypto customers.
The SEC’s so-called Staff Accounting Bulletin No. 121 (SAB 121) is intended to clarify the accounting treatment of crypto assets. Accordingly, banks would be required to store crypto assets for customers themselves. That could result in significant capital costs and “make digital assets less secure,” Republican Rep. Riley Nickel said in a statement hearing.
SAB 121 was originally introduced as a guide for employees. One examination However, the Government Accountability Office (GAO) found that the SEC should have had the rule approved by Congress beforehand. According to Republican MPs, SAB 121 is “illegal” anyway.
“Gary Gensler, in his digital asset jihad, used a supposedly banal HR accounting policy to essentially block large publicly traded banks from taking custody of digital assets,” explained Republican Mike Flood told CoinDesk.
With a possible veto: Joe Biden stands in the way
Gensler and the SEC received encouragement from the Oval Office: “SAB 121 was enacted in response to proven technological, legal and regulatory risks that have caused significant losses to consumers,” President Biden said in a statement Explanation from May 8th.
The White House is “strongly opposed” to interfering with the SEC’s work on this matter. If necessary, they want to block the House of Representatives resolution with a veto. According to the US Constitution, the House of Representatives could still override the president’s veto with a two-thirds majority.
For the Republican Patrick McHenry SAB 121 is “a massive departure from the way heavily regulated banks are traditionally required to handle assets on behalf of their customers.”
Crypto industry versus SEC
SAB 121 is not the first time the SEC has taken aim at the crypto industry. According to Gary Gensler, crypto platforms often do not adhere to the standards that apply to regulated securities exchanges.
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However, with a recent lawsuit from Consensys, the industry knows how to defend itself. What’s more: According to McHenry, Gensler “knowingly misled” Congress in a hearing.
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