In a bold move, three U.S. lawmakers introduced a Bipartisan Resolution to revoke the U.S. Securities and Exchange Commission’s (SEC) Staff Accounting Bulletin (SAB) 121. The move comes as part of a growing backlash against the regulatory actions of Chair Gary Gensler, who has been criticized for his stance on the crypto industry.
Meanwhile, calls for Gensler’s ousting have gained momentum among lawmakers who accuse the SEC of overreach and aggressive regulatory tactics.
Lawmakers challenge SEC’s policy
On February 1, U.S. Representatives Mike Flood, Wiley Nickel, and Senator Cynthia Lummis joined forces to challenge the SEC’s stance on crypto asset custody in the banking sector. Their resolution seeks to eliminate SAB 121, a directive that has been a point of contention within the crypto industry.
SAB 121 has been widely criticized for prohibiting banks from offering crypto custodian services to digital asset investors unless they keep the managed assets on the balance sheet. This restriction has faced backlash from industry participants who argue that it hampers innovation and restricts the growth of the crypto market.
The lawmakers assert that SAB 121 is more than just an accounting bulletin; it functions as a rule that stifles the potential of traditional banks to provide custodial services for digital assets. Congressman Wiley Nickel emphasized the need for Congress to intervene, stating, “Gary Gensler and the Securities and Exchange Commission continue to overstep their authority, and it’s time for Congress to weigh in on Staff Accounting Bulletin No. 121.”
Support for the resolution has also poured in from industry groups such as the American Bankers Association and the Bank Policy Institute. These organizations have jointly called for the reversal of SAB 121 to ensure that assets custodied by banks are kept off-balance sheet, thus enabling the broader adoption of crypto-related services within the traditional financial sector.
Growing criticism of Chair Gary Gensler
The introduction of the Bipartisan Resolution to challenge SAB 121 is just the latest in a series of criticisms against Chair Gary Gensler and the SEC’s regulatory approach towards the crypto industry.
In November 2023, Representatives Tim Burchett and Steve Womack voiced their concerns about the SEC’s enforcement actions, asserting they constitute a financial drain on the United States. They accused the commission of overreach and an overly aggressive regulatory approach, proposing a significant salary cut for Chair Gensler, reducing his annual salary to $1.
Majority Whip Tom Emmer took an even more drastic stance in December, calling for the complete removal of Chair Gensler from his position. Emmer argued that the capital markets needed protection from what he described as Gensler’s “tyrannical” approach to regulation and called for an end to the perceived abuses endured during Gensler’s tenure.
