The US Securities and Exchange Commission (SEC) has been facing ongoing concerns regarding the Staff Accounting Bulletin No. 121 (SAB 121). Commissioner Hester Peirce has recently voiced her reservations about this regulation, emphasizing the need for a reevaluation of its content and process. Peirce’s comments follow a speech by SEC Chief Accountant Paul Munter, who reiterated the Commission’s unchanged stance on SAB 121.
In his speech, Munter highlighted the SEC staff’s perspective on SAB 121, stating that the regulation requires entities to record liabilities on their balance sheets to reflect their responsibility in safeguarding digital assets held for others. This approach, according to Munter, aims to provide investors with essential information to evaluate the risks associated with safeguarding cryptocurrencies. However, Munter also acknowledged some exceptions to this rule, such as bank-holding companies with bankruptcy protection and broker-dealers without control over cryptographic keys.
Despite the SEC’s intentions to enhance transparency and risk management in the crypto industry, SAB 121 has sparked significant concerns among industry players. Many stakeholders perceive the regulation as an overreach by the SEC, leading to a backlash. US lawmakers attempted to overturn the SEC’s guidance earlier this year, but President Joe Biden vetoed the repeal, further entrenching the regulation.
In response to Munter’s speech, Commissioner Peirce took to social media to express her reservations about SAB 121. She invited others to share their opinions on the policy via email, signaling a willingness to engage in a dialogue about the regulation. Nate Geraci, president of the ETF Store, added his voice to the conversation, criticizing the SEC for hindering regulated financial institutions from custodying digital assets. Geraci’s comments underscore the industry’s frustration with the SEC’s approach to crypto regulation.
The SEC’s Staff Accounting Bulletin No. 121 continues to be a point of contention within the cryptocurrency industry. While the SEC argues that SAB 121 is necessary to protect investors and enhance transparency, many market participants view it as an impediment to innovation and growth. The ongoing debate surrounding SAB 121 highlights the complexities of regulating digital assets in a rapidly evolving financial landscape.
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