More than 40 House and Senate Republicans yesterday urged Securities and Exchange Commission Chair Gary Gensler to rescind an SEC staff accounting bulletin that changed how banks and other publicly traded entities were expected to account for digital assets held in custody. Gensler appeared before the House Financial Services Committee today for an oversight hearing. (A Senate Banking Committee oversight hearing originally scheduled for Wednesday was postponed.)
In a joint letter, the 42 lawmakers said the SEC’s SAB 121 deviates from established accounting standards, fails to accurately reflect the underlying legal and economic obligations of custodians, and places consumers at a greater risk of loss. They also noted that lawmakers from both parties earlier this year voted in favor of a House joint resolution (H.J. Res. 109) to overturn the bulletin. The resolution was vetoed by President Biden.
“Issuing staff guidance to impose policy changes is not appropriate and violates both the spirit and the letter of the Administrative Procedure Act,” the lawmakers said, referring to the federal law that outlines the procedures for adopting new rules and regulations. “We urge you to rescind SAB 121 and work with Congress to ensure Americans have access to safe and secure custodial arrangements for digital assets.”
In related news, House Financial Services Committee Chairman Patrick McHenry (R-N.C.) and the subcommittee chairs today sent letters to the heads of the Federal Reserve, FDIC and the Office of the Comptroller demanding any interagency communications about SAB 121. “This will assist the committee as it works to evaluate the SEC’s justification for publishing SAB 121 despite the ongoing interagency initiatives amongst the federal prudential regulators,” the lawmakers said.
