- Call to Repeal SAB 121
- Criticism of SEC and Sharp Political Response
- Reactions and Potential Consequences
In light of the recent veto on the repeal bill, over 40 GOP senators and representatives have sent a letter to SEC Chair Gary Gensler demanding the rescission of SAB 121.
Call to Repeal SAB 121
On September 21, House Financial Services Committee Chair Patrick McHenry, Senator Cynthia Lummis, and 40 other politicians stated that SAB 121 disrupts cryptocurrency custody rules, weakens consumer protections, and stifles financial innovation.
Criticism of SEC and Sharp Political Response
The letter stated that SAB 121—a proposed rule requiring SEC-reporting entities to list cryptocurrency holdings as liabilities—was issued without consultation with "prudent regulators" and deviates from established accounting standards. Politicians argue that the new rule sets protective measures that fail to reflect the legal and economic obligations of custodians and put consumers at risk of loss. Democratic Representative Wiley Nickel claims that SAB 121 will hinder U.S. banks from holding cryptocurrency exchange-traded products on their balance sheets, creating a "concentration risk" by giving non-bank entities more control.
Reactions and Potential Consequences
The letter was sent ahead of a House Financial Services Committee hearing with the SEC on September 24. Politicians also accused the SEC’s Office of the Chief Accountant of allegedly collaborating with certain institutions to circumvent reporting requirements, potentially causing inconsistencies. According to Wyoming hearings on September 17, the largest U.S. custodian bank, Bank of New York Mellon, reportedly received an exemption from SAB 121. President Joe Biden vetoed the repeal bill in June, and the House fell 60 votes short of overturning that veto.
Amid ongoing conflict over SAB 121, Republican lawmakers plan to continue pressuring the SEC to repeal the rule, which they believe threatens consumer safety and financial stability.
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