More than 40 Republican lawmakers have united in urging the Securities and Exchange Commission (SEC) to rescind its controversial Staff Accounting Bulletin No. 121. In a letter addressed to SEC Chairman Gary Gensler on September 23, the coalition expressed concerns that the bulletin, which classifies all cryptocurrency custody by SEC-reporting companies as a liability, undermines consumer protection and stifles financial innovation.
House Financial Services Committee Chairman Patrick McHenry and Senator Cynthia Lummis led the charge, emphasizing that the guidance was issued without input from “prudent regulators” and deviates from established accounting practices. They argue that SAB 121 misrepresents custodians’ legal and economic responsibilities, potentially exposing consumers to financial loss.
The lawmakers criticized the SEC for sidestepping proper regulatory procedures, stating that issuing the rule as staff guidance circumvented the necessary notice and comment rulemaking process mandated by the Administrative Procedure Act. They assert that rescinding SAB 121 is the only viable solution and falls well within the SEC’s authority, particularly following the rejection of a bipartisan repeal bill by President Joe Biden in June.
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