Congressman Wiley Nickel has condemned the SEC’s approach to regulating cryptocurrencies and called for the withdrawal of SAB121. In a letter to SEC Chair Gary Gensler, Nickel expressed his concerns about the agency’s “open hostility” towards digital assets and urged Gensler to rescind the controversial staff accounting bulletin. The letter comes as the Senate prepares to vote on nullifying SAB121. Nickel emphasized that withdrawing the bulletin would be a positive step towards achieving a balance in crypto regulation and allowing for digital asset custodial banking. The SEC’s guidance on digital asset accounting has faced criticism for its strict capital requirements on banks entering the crypto industry. Financial institutions participating in the sector are required to disclose clients’ liabilities along with custodied digital assets on their balance sheets. In addition to concerns about the bulletin’s regulatory stance, U.S. lawmakers have raised doubts about the approval process for SAB121. The Government Accountability Office found that the SEC failed to report the rule change under the Congressional Review Act. Last week, the House passed a bill introduced by Nickel and Representative Mike Flood to invalidate SAB121, and Senator Cynthia Lummis is leading the Senate’s push to nullify the accounting bulletin. However, President Joe Biden has stated that he would veto any attempts to turn the bill into law, citing the need for comprehensive and effective regulation of crypto-assets. Nickel’s letter to Gensler may be a last-minute effort to persuade him to rescind SAB121 before it reaches Biden’s desk if the Senate passes Lummis’ companion legislation.
