Congressman Wiley Nickel has criticized SEC Chair Gary Gensler for the agency’s “open hostility” towards crypto and SAB121, sending a letter urging him to rescind the controversial staff accounting bulletin. Nickel believes withdrawing SAB121 would protect investors, bolster American competitiveness, and respect Congress’s role in the rulemaking process. The SEC’s guidance on digital asset accounting has faced criticism for its stringent capital requirements on banks and its potential implications for digital asset custodial banking. By withdrawing SAB121, Nickel sees a positive step towards balancing crypto regulation and allowing for the growth of the digital asset industry.
The SEC’s handling of SAB121 has also come under scrutiny for its approval process, with the Government Accountability Office finding that the SEC did not report the rule change under the Congressional Review Act. In response, Nickel and Representative Mike Flood introduced a bill to invalidate SAB121, which has already passed in the House. Senator Cynthia Lummis is leading the Senate push to nullify the accounting bulletin, citing concerns that it hinders banks from safeguarding digital assets and creates risks for consumers. Nickel has accused Gensler and the SEC of overreaching their authority by sidestepping the usual regulatory process.
President Joe Biden has indicated that he would veto any attempts to invalidate SAB121, stating that the bulletin was issued in response to technological, legal, and regulatory risks that have caused losses to consumers. The White House argues that limiting the SEC’s ability to regulate crypto-assets effectively could lead to financial instability and market uncertainty. If the Senate passes Lummis’ companion legislation to nullify SAB121, Nickel’s letter to Gensler may be a final push to persuade him to rescind the bulletin before it reaches Biden’s desk.
Nickel is concerned that the SEC’s approach to crypto regulation is turning the industry into a political football, forcing the President to take sides on an issue that is important to many Americans. He believes that withdrawing SAB121 would be a step towards creating a more balanced regulatory environment for crypto and digital assets. By rescinding the controversial bulletin, the SEC could potentially ease the burdens faced by financial institutions looking to enter the crypto space and help foster innovation and competition within the industry.
Overall, the ongoing debate surrounding SAB121 highlights the challenges and complexities of regulating digital assets and cryptocurrency in the United States. The clash between lawmakers, regulators, and the executive branch reflects differing opinions on how best to approach the evolving landscape of financial technology. As the Senate prepares to vote on the fate of SAB121, the outcome will have significant implications for the future of crypto regulation and the broader digital asset industry in the country.
