Congress Takes Aim at SEC’s Controversial Crypto Accounting Rule 👊💼

Senator Lummis and House Members Advocate for Repeal of SEC's Staff Accounting Bulletin 121, Which Hampers Companies' Crypto Custody Efforts.

US lawmakers are trying to reverse the SEC’s policy on cryptocurrency accounting.

Members of Congress are fighting back against the U.S. Securities and Exchange Commission’s (SEC) accounting bulletin that puts restrictions on companies holding their customers’ crypto assets. In an effort to challenge the rule, Sen. Cynthia Lummis (R-Wyo.), Rep. Wiley Nickel (D-N.C.), and Rep. Mike Flood (R-Neb.) have introduced matching resolutions in the Senate and House of Representatives 🏛️. These resolutions would formally disapprove of the accounting rule and assert that it has no legal force.

The SEC’s Controversial Accounting Bulletin: What’s the Big Deal? 📚💼

The SEC’s 2022 staff accounting bulletin No.121 (SAB 121) has caused quite a stir in the digital assets sector 🚨. This accounting rule states that companies holding a client’s cryptocurrencies should include them on their own balance sheet. This requirement could potentially burden banks and other institutions with the need to hold significant capital as a precautionary measure against the risks associated with crypto.

Unsurprisingly, this move has caused an uproar among digital asset proponents. Could you imagine having to carry around an entire suitcase full of bricks just because you have one brick in your hand? 🧱💼 That’s how some institutions feel about the onerous amount of capital they would be required to maintain.

The SEC’s Overreach and Congress’s Check 🚫🏛️

When a federal regulator issues staff guidance, it is meant to provide advice on understanding and interpreting existing policies. However, when agencies misuse this opportunity and use guidance to establish new policies, it often raises eyebrows 👀. The Government Accountability Office (GAO) found last year that the SEC should have consulted with lawmakers and followed the necessary procedures before issuing this controversial accounting rule. Congress is now stepping in as a check against this apparent regulatory overreach.

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Q&A: Your Burning Questions Answered 🔥🔍

Q: Why is this accounting rule causing such a fuss in the digital assets sector? A: The rule requires companies to include their clients’ cryptocurrencies on their own balance sheet, which means they have to hold additional capital. This can be burdensome for banks and other institutions, deterring them from offering digital asset custody options.

Q: Could this resolution actually repeal the SEC’s accounting rule? A: The resolution is issued under the Congressional Review Act, which allows lawmakers to repeal rules put forth by federal agencies. However, it still requires support from both houses of Congress and the President’s signature to become effective.

Advocacy Groups in Support 👍📣

Crypto lobbying groups like the Chamber of Digital Commerce have praised the efforts made by members of Congress to challenge the accounting rule. Mandating custodians to hold equal assets on their balance sheets as liabilities can discourage institutions from offering digital asset custody services, according to Chamber CEO Perianne Boring.

The SEC’s Response? 🤐

At the time of writing, the SEC has not provided a comment in response to this latest opposition to the accounting bulletin. We’ll be sure to keep you updated! 🚧📰

Our Take: What Does the Future Hold? 🔮📈

The introduction of these resolutions by members of Congress shows that there is growing concern about the SEC’s approach to regulating the crypto industry. While it’s still uncertain whether these resolutions will succeed in repealing the accounting rule, it’s clear that lawmakers are eager to assert their influence and bring the SEC to task.

In the future, we anticipate more discussions between regulators, lawmakers, and industry stakeholders to find a consensus on how to best regulate crypto assets. Striking a balance between investor protection and innovation is no easy task, but with careful consideration and input from all sides, we believe a solution can be reached. Stay tuned, folks! 📣🌟

References:

• U.S. SEC Messed Up in Handling Contentious Crypto Accounting Bulletin: GAO
• India’s Digital Rupee Crossed a Million Transactions in 1 Day With the Help of Banks

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Share Your Thoughts and Spread the Word! 🗣️📢

What are your thoughts on Congress’s efforts to challenge the SEC’s accounting rule? Do you agree with the criticism of this controversial rule, or do you believe it is necessary for safeguarding investors? Share your opinions in the comments and don’t forget to spread the word on social media. Together, we can have a lively conversation and drive positive change in the crypto space! 🚀🌐

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