US Republican lawmakers from both chambers of Congress have taken a significant step by advocating for a more favorable regulatory environment for bitcoin (btc) and crypto asset custodians.
In a letter to SEC Chairman Gary Gensler, a coalition of Pro-cryptocurrency lawmakersincluding House Financial Services Committee Chairman Patrick McHenry and Senator Cynthia Lummis, have urged the SEC to rescind its accounting standard for digital assets, known as Staff Accounting Bulletin 121 (SAB 121).
Criticism of SEC SAB 121 mounts
He letterIssued Monday and endorsed by forty-two other key members of the House and Senate, it emphasizes that Congress has expressed “overwhelming” bipartisan support for disapproving SAB 121 through passage of HJRes.109.
This resolution asks the SEC to reconsider its position on the bulletin, which requires custodians recognize a liability and maintain a corresponding offset on their balance sheets, measured at the fair value of the client's digital assets.
Lawmakers argue that this approach deviates from established accounting standards and does not accurately reflect the legal and economic obligations of custodians, potentially putting consumers at greater risk.
One of the main criticisms of SAB 121 is that it was implemented without adequate consultation with prudential regulators, which led to “confusion and inconsistencies” in its application between Financial institutions.
The lawmakers claim that the SEC has circumvented the necessary notice and comment process required by the Administrative Procedure Act (APA) by issuing this rule as staff guidance.
They argue that the SEC's Office of the Chief Accountant (OCA) has only made matters worse by working with select institutions to avoid balance sheet reporting requirements on a case-by-case basis, undermining the transparency and consistency the SEC claims to uphold.
Could BNY Mellon's approval as a bitcoin custodian signal a shift?
The timing of the letter is significant, as it comes just four days after the SEC… granted Bank of New York (BNY) Mellon has obtained an exemption from SAB 121, becoming the first bank to receive such approval.
This exemption could potentially open the door for other financial institutions to pursue similar opportunities, signaling a possible shift in the SEC’s approach toward traditional banks entering the market. cryptocurrency space.
Michael Novogratz, CEO of Galaxy Digital, speculated that this move by the SEC could encourage more banks to get involved with digital assets, provided the regulatory landscape becomes more conducive.
However, pro-cryptocurrency lawmakers are calling for the SEC to work with Congress to ensure Americans have access to secure custody arrangements for bitcoin and other cryptocurrencies. digital assets.
By rescinding SAB 121, they argue, the SEC would not only align itself with established accounting practices but would also foster a more favorable environment for traditional financial institutions looking to participate in the cryptocurrency market.
At the time of writing, bitcoin was trading at $63,240, having been in a tight range between the current price and the $62,000 mark for the past few days.
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