- What is SAB 121?
- Congress and Crypto Industry Criticisms of SAB 121
- The Future of Cryptocurrency Regulation in the USA
On September 23, a group of over 40 members of Congress sent letters to the heads of four major U.S. regulators, demanding the repeal of a controversial SEC rule known as SAB 121.
What is SAB 121?
SAB 121 is an SEC staff bulletin issued in April 2022. According to the SEC website, the document represents 'staff interpretations' rather than official SEC guidelines or rules. The bulletin asserts that the SEC considers the custody of cryptocurrency to be particularly high-risk compared to other assets and argues for specific rules for U.S. institutions that custody cryptocurrency.
Congress and Crypto Industry Criticisms of SAB 121
In a letter to SEC Chairman Gary Gensler, members of Congress sharply criticized the issuance of SAB 121, arguing that it hinders consumer protection and financial innovation. The letter also claims that the rule was issued without consulting other regulators, allowing the SEC to bypass established norms and processes. The crypto industry has echoed this criticism, pointing to the high costs and reduced willingness of banks to engage in crypto custody.
The Future of Cryptocurrency Regulation in the USA
Despite multiple efforts to amend or repeal SAB 121, including bipartisan votes in Congress and President Biden's veto, the controversies surrounding this rule persist. Recent rumors that the Bank of New York Mellon has been exempted from compliance with SAB 121 and numerous calls for its repeal may indicate a potential softening of federal measures against cryptocurrencies in the U.S.
With recent calls from Congress and figures in the crypto industry to repeal SAB 121, the U.S. may be moving towards a more lenient regulation of cryptocurrencies. Only time will tell how these events will unfold.
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