US House Committee Chair Patrick McHenry issued a statement criticizing the SEC’s excessive involvement in regulating cryptocurrency assets.
In addition to their strong criticism of the U.S. Securities and Exchange Commission (SEC) for being too involved in regulating cryptocurrencies, leading Republican lawmakers are calling for the April 2022 rules related to cryptocurrency accounting issued by the SEC to be stopped.
Blocking the US SEC’s SAB 121?
On April 11, 2022, the SEC introduced Staff Accounting Bulletin (SAB) 121, aiming to simplify how banks and financial institutions handle accounting for crypto assets. However, prominent figures like Patrick McHenry, who leads the US House Financial Services Committee, strongly oppose the rule, considering it harmful. McHenry argues that the SEC didn’t follow the typical process for creating federal rules, and they believe a Congressional review is necessary.
In a joint statement, Chairman McHenry and Senator Cynthia Lummis expressed their concerns, saying, “SAB 121 is detrimental to consumers and represents an excessive use of the U.S. SEC’s authority. The rule was created without input from prudential regulators and the public, so Congress must intervene to prevent this harmful rule from taking effect.”
Republican lawmakers have pointed out that the rule discourages companies from disclosing their cryptocurrency holdings. This could, in turn, prevent institutions and businesses from providing safe custody services for Americans and their assets. Recently, the House Financial Services Committee has been advocating for the Clarity for Payment Stablecoins Act of 2023 to create regulations for stablecoins.
Coinbase Identified Risks in 2022
In May 2022, the cryptocurrency exchange Coinbase highlighted a “new risk factor” related to the SEC’s SAB 121 regulation. They made it clear that this did not mean they were at risk of going bankrupt. In its April 2022 bulletin, the SEC outlined rules for companies like Coinbase that hold cryptocurrencies for their customers.
According to the rule, these companies must include detailed information about the type and amount of cryptocurrency assets in their financial statements. This requirement could potentially impact the privacy of customer data.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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