House Committee Approves Resolution Overturning Crypto Regulation
Summary:
The House Financial Services Committee voted to support a resolution that aims to overturn the United States Securities and Exchange Commission regulation, SAB 121, which requires banks to report crypto holdings as liabilities. Critics argue that the rule undermines consumer protection and creates unnecessary risks to the cryptocurrency sector. Still, the resolution must pass a House and Senate floor vote to reverse SAB 121.
In a move supporting the involvement of banks in cryptocurrency custody, the House Financial Services Committee (HSFC) endorsed a resolution to overturn a regulation imposed by the United States Securities and Exchange Commission. This pivotal decision was made during a Feb. 29 hearing, with a majority vote of 31 out of 51 committee members, spanning both political parties. The resolution aims to dismantle SAB 121, benefiting consumers by eliminating obstacles which have kept stringent banking institutions from acting as digital asset custodians.
Implemented in March 2022, the SEC's SAB 121 mandated financial institutions dealing with cryptocurrency assets to report these holdings as liabilities on their balance sheets. This was seen as an unjust regulation by many banks hoping to manage cryptocurrency because custodial assets generally fall off-balance sheet, including securities and digital currencies such as Bitcoin.
Rom Mike Flood, the Republican congressman behind the resolution, stressed that the consequences of compelling banks to include these assets on their balance sheets could be substantial. He explained that, consistent with SAB 121, banks could face impacts on other regulatory obligations, including capital and liquidity requirements.
The counter-regulatory measure was proposed on Feb. 1 by Flood and Democrat Wiley Nickel, who argue that SAB 121 exceeded its role as an accounting bulletin and had effectively attained the status of a de-facto law. They contend it undermines consumer protection and leaves customer's digital assets in jeopardy. However, the resolution must be passed by a House and Senate floor vote before SAB 121 can be revoked.
Crypto advocate and Republican Congressman, Tom Emmer, criticized SAB 121 as an illegitimate example of SEC Char Gary Gensler's ongoing animosity towards the digital asset community. Emmer declared SAB 121 introduced avoidable risk factors into the cryptocurrency community, giving Bitcoin ETFs as an instance where not a single bank provides custodial services.
Democrat Congresswoman, Maxine Waters, who voted against the resolution, finds it ironic. Waters argues that, while Republicans and cryptocurrency enthusiasts often lament the SEC's lack of clarity, the proposed resolution effectively prevents the SEC staff from providing much-needed clarity on cryptocurrency. The unenforceability of the SABs under SEC’s jurisdiction, due to their non-binding nature, assists companies in clarifying how cryptocurrency firms should account for their clients' crypto holdings. These bulletins do not necessitate public notification or comment periods like other, more formal rules.
Published At
3/1/2024 5:02:26 AM
Disclaimer: Algoine does not endorse any content or product on this page. Readers should conduct their own research before taking any actions related to the asset, company, or any information in this article and assume full responsibility for their decisions. This article should not be considered as investment advice. Our news is prepared with AI support.
Do you suspect this content may be misleading, incomplete, or inappropriate in any way, requiring modification or removal?
We appreciate your report.