- The U.S. House of Representatives recently convened to discuss the potential repeal of a rule that is seen as unfavorable for cryptocurrencies.
- The rule in question is the Securities and Exchange Commission’s (SEC) Accounting Bulletin Statement (SAB) 121, which requires banks to disclose all crypto assets, hold customer-owned crypto assets on their balance sheets, and maintain an offset obligation.
- Despite opposition from the majority of Democrats on the House Financial Services Committee, Republicans argue that without changing this rule, the U.S. risks losing cryptocurrencies to overseas countries.
In a recent development, the U.S. House of Representatives is debating the repeal of an SEC rule that could have significant implications for the banking and crypto sectors. The outcome could reshape the regulatory landscape for cryptocurrencies in the U.S.
Debate Over SEC’s Accounting Bulletin Statement 121
House Joint Resolution 109 has sparked an hour-long debate in the U.S. House of Representatives. The resolution aims to repeal the SEC’s SAB 121, a rule that mandates banks to disclose all crypto assets, hold customer-owned crypto assets on their balance sheets, and maintain an offset obligation. Essentially, for every dollar of crypto held in custody, the bank must hold an equivalent amount.
Opposition and Support for the Repeal
In response to the SEC’s rule, a Joint Resolution bill to repeal SAB 121 has been introduced by Senator Cynthia Lummis, Representative Mike Flood, and Representative Wiley Nickel. Democrats, led by Maxine Waters, advocate for preserving the disclosure rules in SAB 121 but propose a separate bill to change how crypto custody operations work. They believe that repealing SAB 121 would weaken the SEC’s authority and its ability to issue new guidance on cryptocurrencies in the future.
Concerns Over Centralization of Bitcoin
Representatives Flood and Nickel have expressed concerns over the centralization risk of Bitcoin, a supporting asset for Bitcoin ETFs. They pointed out that large firms like BlackRock, Fidelity, and Bitwise are unable to custody with banks, leading to high centralization at Coinbase.
Conclusion
As the debate continues, all eyes are on the vote scheduled for this weekend. While the decision is likely to pass in the House in a bipartisan manner, it is expected to face challenges in the Senate. Furthermore, the White House has signaled its intention to veto any attempt to dismantle SAB 121. The outcome of this debate could significantly impact the regulatory landscape for cryptocurrencies in the U.S.
