- US legislators are debating the legality of the Securities and Exchange Commission’s (SEC) Staff Accounting Bulletin (SAB) 121, which regulates crypto custody firms.
- The crypto community criticizes the SEC’s policies, while the SEC defends them as necessary for investor protection.
- Lawmakers including Sen Cynthia Lummis, Rep Mike Flood, and Rep Wiley Nickel are seeking to declare the policy null and void.
US legislators are challenging the legality of the SEC’s SAB 121, a policy regulating crypto custody firms, sparking a heated debate within the crypto community.
US Legislators Challenge SAB 121
In 2022, the SEC introduced SAB 121, requiring firms offering crypto services to hold assets on their balance sheet. This policy has been met with significant backlash from the crypto community, who argue that it stifles the sector. US legislators are now seeking to repeal SAB 121, arguing that it places an undue burden on firms wishing to offer crypto services.
Crypto Community Criticizes SEC Policies
The crypto community has been vocal in their criticism of the SEC’s policies, arguing that they are stifling innovation and driving investment out of the country. Companies like Coinbase are pushing for clearer rules in the US, while others argue that the SEC should have consulted with Congress before implementing SAB 121.
Lawmakers Seek to Nullify SAB 121
US legislators, including Sen Cynthia Lummis, Rep Mike Flood, and Rep Wiley Nickel, have introduced resolutions to declare SAB 121 null and void. They argue that the SEC overstepped its bounds by issuing SAB 121 without consulting with prudential regulators or going through the notice-and-comment process.
SEC Defends SAB 121
Despite the backlash, the SEC, including Gary Gensler, has defended SAB 121. They argue that the policy is necessary to protect investors and addresses liabilities on a company’s balance sheet to safeguard user assets.
Conclusion
The debate over SAB 121 highlights the ongoing tension between the crypto community and financial regulators. While the SEC argues that such policies are necessary for investor protection, critics argue that they are stifling innovation and driving investment away. As this debate continues, the future of crypto regulation in the US remains uncertain.
