US Republican lawmakers from each chambers of Congress have taken a big step in advocating for a extra favorable regulatory setting for Bitcoin (BTC) and crypto asset custodians.
In a letter addressed to US Securities and Trade Fee (SEC) Chair Gary Gensler, a coalition of pro-crypto lawmakers, together with Home Monetary Providers Chair Patrick McHenry and Senator Cynthia Lummis, has urged the SEC to rescind its accounting rule for digital belongings, referred to as Employees Accounting Bulletin 121 (SAB 121).
Criticism Mounts Towards SEC’s SAB 121
The letter, issued on Monday and endorsed by forty-two different key members of the Home and Senate, emphasizes that Congress has expressed “overwhelming” bipartisan assist for disapproval of SAB 121 by the passage of H.J.Res.109.
This decision requires the SEC to rethink its stance on the bulletin, which requires custodians to acknowledge a legal responsibility and keep a corresponding offset on their steadiness sheets, measured on the honest worth of the client’s digital belongings.
The lawmakers argue that this method deviates from established accounting requirements and fails to precisely mirror the authorized and financial obligations of custodians, doubtlessly placing customers at larger threat.
One of many key criticisms of SAB 121 is that it was applied with out sufficient session with prudential regulators, resulting in “confusion and inconsistencies” in its utility amongst monetary establishments.
The lawmakers assert that the SEC has circumvented the mandatory discover and remark rulemaking course of mandated by the Administrative Process Act (APA) by issuing this rule as employees steerage.
They contend that the SEC’s Workplace of Chief Accountant (OCA) has solely exacerbated the scenario by working with choose establishments to keep away from the steadiness sheet reporting necessities on a case-by-case foundation, undermining the transparency and consistency that the SEC claims to uphold.
BNY Mellon’s Approval As Bitcoin Custodian Might Sign A Shift?
The timing of the letter is important, coming simply 4 days after the SEC granted the Financial institution of New York (BNY) Mellon an exemption from SAB 121, marking it as the primary financial institution to obtain such approval.
This exemption might doubtlessly open the door for different monetary establishments to hunt related alternatives, signaling a doable shift within the SEC’s method in the direction of conventional banks coming into the cryptocurrency house.
Michael Novogratz, CEO of Galaxy Digital, speculated that this transfer by the SEC could encourage extra banks to have interaction with digital belongings, offered the regulatory panorama turns into extra conducive.
Nevertheless, the pro-crypto lawmakers are calling for the SEC to collaborate with Congress to make sure that People have entry to protected and safe custodial preparations for Bitcoin and different digital belongings.
By rescinding SAB 121, they argue, the SEC wouldn’t solely align itself with established accounting practices but additionally foster a extra supportive setting for conventional monetary establishments seeking to take part within the cryptocurrency market.
On the time of writing, Bitcoin was buying and selling at $63,240, having been in a decent vary between the present value and the $62,000 mark for the previous few days.
Featured picture from DALL-E, chart from TradingView.com
