U.S. Lawmakers Want SEC Crypto Accounting Policy Overturned

The contentious accounting advisory issued by the United States Securities and Exchange Commission (SEC) that imposes limits on businesses 

that wish to store the cryptocurrency assets of their customers is being subject to efforts by members of Congress to get it removed.

Reps. Wiley Nickel (Democrat of North Carolina) and Mike Flood (Republican of Nebraska) submitted identical resolutions in the Senate and House of Representatives on Thursday.

These resolutions would explicitly disapprove of the accounting regulation and come to the conclusion that it does not have any legal effect. Senator Cynthia Lummis (Republican of Wyoming) introduced these resolutions.

According to the Staff Accounting Bulletin No.121, also known as SAB 121, issued by the Securities and Exchange Commission in 2022, a company that is keeping a client's cryptocurrency should do so on the firm's own balance sheet.

This could force banks that are interested in holding cryptocurrency to maintain what they would consider to be an excessive amount of capital in order to compensate for the risk. An outcry was heard from those working in the digital assets industry in response to the action.

When a federal regulator gives guidance to its personnel, the purpose of the guidance is to provide counsel on how to comprehend and interpret the policy that is already in place. When an agency makes inappropriate use of guidance in order to establish new policy, Congress frequently becomes enraged by this behavior

This was the conclusion reached by the Government Accountability Office in the previous year, which stated that the Securities and Exchange Commission (SEC) ought to have communicated this policy to legislators and jumped through the various hoops that are expected of the agency whenever it releases a new regulation.

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