- House and Senate sent a clear message from Congress to the SEC
- They joined the resolution (H.J. Res. 109) to overturn the controversial Staff Accounting Bulletin #121
- They expressed their frustration with the way SAB 121 was passed and how it is being applied
US lawmakers, led by House Financial Services Chairman Patrick McHenry and pro-crypto Senator Cynthia Lummis, have asked the SEC to repeal SAB 121.
The letter was joined by 13 senators and 29 House members criticizing the SEC, its approach to SAB 121, and violating the Administrative Procedure Act.
This synchronized appeal came ahead of the SEC’s scheduled oversight hearing tomorrow and should have a strong impact.
What Is the Claim of US Lawmakers
So we see another unprecedented act of solidarity with the House and Senate sending a clear message from Congress to the SEC, which looks particularly interesting in the context of the peak of the U.S. presidential election of 2024.
The joint resolution (H.J. Res. 109) aims to overturn the controversial Staff Accounting Bulletin #121 (SAB 121) and in particular its controversial application by the SEC. Earlier, President Biden vetoed a bill to repeal SAB 121, but expressed a willingness to work with Congress to create a balanced regulatory framework for digital assets.”
SAB 121 requires public companies or custodial organizations that hold crypto assets on behalf of their customers to record them as liabilities on their balance sheets. This creates large overhead costs even for large organizations and complicates financial initiatives for small businesses.
Lawmakers expressed in a letter to the SEC their frustration that SAB 121 was passed without due process, violates existing laws, and creates excessive regulation.
“Issuing staff guidance to impose policy changes is not appropriate and violates both the spirit and the letter of the Administrative Procedure Act.”
Moreover, the application of SAB 121 brings the question and the SEC can make exemptions at its discretion, as recently announced.
This has caused even more backlash because, from the perspective of lawmakers, the SEC is jumping from over-regulation to unclear and inconsistent exemptions, creating regulatory confusion that is highly disruptive to the business environment.
Conclusions
Another act of solidarity aimed at simplifying regulations for the financial sector, and the crypto sector in particular, may be an indicator of a clear pro-crypto vector.
Perhaps it should serve as an indicator to all crypto investors and crypto companies that regardless of the election results, there are enough pro-crypto decision-makers in the government who are interested in a favorable crypto environment.
It may also serve as an additional indicator that the U.S. increasingly sees cryptocurrencies as a means of strengthening its economic and political leadership in the international arena, not wanting to give the initiative to Asia, which is extremely active in crypto now.
