US Lawmakers seek to repeal the SEC’s cryptocurrency accounting policy

Feb 02, 2024
Senator Lummis and members of the House of Representatives are trying to repeal the controversial accounting bulletin of the U.S. Securities and Exchange Commission on imposing restrictions on companies wishing to store their clients' digital assets.

Senator Cynthia Lummis (R-Wyo.) and Representatives Wiley Nickel (D-N.C.) and Mike Flood (R-Neb.) published relevant resolutions in the Senate and House of Representatives on Thursday.

In accounting bulletin No. 121 for SEC staff dated 2022 (SAB 121), it says that the custodian companies of clients’ cryptocurrencies must do this on their own balance sheet. This measure has caused a negative reaction in the digital asset sector.

The Accounting Commission said improper use of the agency’s guidance and recommendations could anger Congress. This was reached in the Accounting Chamber last year.

The SEC had to hand over the policy to lawmakers and go through other procedures required of the agency when introducing the new rule.

Lawmakers passed a resolution under the Congressional Review Act, trying to overturn the SEC’s outcome. At the same time, representatives of the U.S. Securities and Exchange Commission did not immediately respond to a request for comment on the latest objection to the bulletin.

Flood, a member of the House of Representatives, said that the SEC issued SAB 121 without consulting prudential regulators without notice and comment.

At the same time, crypto-lobbying groups such as the Chamber of Digital Commerce praised these efforts.

The Director General of the Chamber, Perianne Boring, noted in the report that the obligation of custodians to maintain an equal asset on the balance sheet as a liability requires parity. This strict requirement deters financial institutions from the ability to store digital assets in various forms.