In a recent senate hearing, Senator Elizabeth Warren voiced her support for the SEC’s Staff Accounting Bulletin (SAB) 121, which specifically addresses accounting guidance for companies dealing with crypto. Warren emphasized that the bulletin’s purpose is to help companies properly account for risks associated with crypto, such as hacks, theft, and loss of digital assets in cases of bankruptcy.
During the hearing, Warren argued that the bulletin does not mandate crypto platforms to include customers’ assets on their balance sheets, contrary to previous statements made by House Financial Services Committee Chairman Patrick McHenry. She clarified that the bulletin does not grant platforms ownership of their customers’ crypto.
As the senate prepared to vote on HJ Res. 109, which sought to overturn the bulletin, Warren expressed her opposition to the vote. She highlighted that the SEC issued the bulletin over two years ago, surpassing the time limit for congressional review. Additionally, Warren argued that the bulletin does not fall under the Congressional Review Act (CRA) as it is not a notice and comment rule and does not possess the force of law. However, the US Government Accountability Office (GAO) classified SAB 121 as a rule for CRA purposes in October 2023.
Despite a majority of the Senate voting to overturn SAB 121 on May 16 following the House of Representatives’ advancement of HJ Res. 109, President Joe Biden is expected to veto the resolution. The Senate vote did not secure enough support to override a presidential veto. Biden must take action within 10 days of receiving the bill.
The ongoing debate surrounding the SEC’s bulletin highlights the complexities and differing opinions within the government regarding regulations for the crypto industry.
