- Controversy Over the Rule
- Congressional Reaction
- SEC's Response
Republicans on the Financial Services and Banking Committees are opposing the new SEC rule on cryptocurrency accounting.
Controversy Over the Rule
The SEC staff issued Accounting Bulletin No. 121 (SAB 121), altering how banks and financial institutions manage cryptocurrencies. Chairman Gary Gensler received a letter from Chairman Patrick McHenry and Senator Cynthia Lummis demanding the rule be rescinded. SAB 121 requires banks to list customers' digital assets as liabilities, contradicting existing accounting standards and potentially harming consumers.
Congressional Reaction
Both the House and Senate voted to overturn this rule, emphasizing that Congress is unwilling to accept it. Republicans argue that the SEC did not consult other financial regulators before issuing the bulletin and bypassed the usual new rule creation process, which includes a public feedback period.
SEC's Response
Instead of acknowledging the issue, the SEC's Office of Chief Accountant is consulting with institutions on a case-by-case basis to help them navigate the strict requirements of SAB 121. However, this only destabilizes the industry and leaves investors in the dark.
Congress wants the SEC to retract SAB 121, claiming it creates confusion and contradicts the legal and economic obligations banks have towards their customers.
