House Republicans Push Back Against SEC Rule on Digital Asset Custody
House Republicans are preparing to challenge a controversial rule by the SEC regarding digital asset custody, denouncing it as an overreach of the agency’s powers. Representative Tom Emmer, a leading Republican lawmaker, criticized SEC Chairman Gary Gensler during a recent press conference on May 7, accusing him of “regulatory hypocrisy, inconsistency, and incompetence.”
The issue in question, known as Staff Accounting Bulletin 121 (SAB 121), has faced criticism for exceeding its authority and showing bias against the digital asset industry. The SEC introduced SAB 121 over two years ago as guidance, aiming to regulate how banks handle consumer-owned digital assets. However, critics argue that the rule extends the SEC’s reach without proper input from Congress or the public.
Emmer asserted that SAB 121 not only goes beyond what is allowed but is also unlawful and goes against the SEC’s mandated objectives. He believes the rule heightens risk within the digital asset market, diminishing fairness and efficiency. Emmer also noted that the rule restricts American investors from utilizing traditional banking services for digital asset custody, exposing them to more risk in case of a custodian’s insolvency. Furthermore, this rule allegedly stifles capital growth and global competitiveness by limiting US banks while foreign banks can freely participate in the crypto market.
According to Emmer, Chairman Gensler is failing to uphold the SEC’s core missions with SAB 121. He stated, “The SEC’s statutory mission is to protect investors, facilitate capital formation, and maintain fair, orderly, and efficient markets.”
House Republicans are planning to pass a resolution by Congressman Mike Flood later this week to repeal the rule. They are calling for bipartisan backing, stressing the significance of a flourishing digital asset environment in the United States. Emmer expressed hope for support from their Democratic colleagues, saying, “We hope that our colleagues on the other side of the aisle will join us in this effort.”
