tl;dr
Pro-crypto Republicans are pushing a resolution in the House of Representatives to challenge the U.S. Securities and Exchange Commission's (SEC) current guidance on crypto custody services. They argue that the guidance discourages banks from offering such services and should be rescinded. The guidan...
Pro-crypto Republicans demand SEC rescind guidance discouraging banks from offering crypto custody services
Pro-crypto Republicans are pushing a resolution in the House of Representatives to challenge the U.S. Securities and Exchange Commission's (SEC) current guidance on crypto custody services. They argue that the guidance discourages banks from offering such services and should be rescinded. The guidance, known as Staff Accounting Bulletin (SAB) 121, outlines the risks and disclosure requirements for crypto custodians.
The Republicans claim that the SEC bypassed the traditional development process for this guidance and that it hinders banks from safeguarding crypto assets. They argue that the SEC is overstepping its regulatory authority in the crypto industry. The resolution, if passed, would express Congress's collective sentiment but is not legally binding. It remains to be seen whether the resolution will pass in both the House and the Senate.
House to vote on joint resolution against SEC's Staff Accounting Bulletin 121
Pro-crypto Republicans are preparing a broadside against the U.S. Securities and Exchange Commission (SEC) this week, demanding that the agency rescind its current guidance that they say discourages banks from offering crypto custody services. On Wednesday, the House of Representatives will vote on Rep. Mike Flood’s (R-Nebraska) joint resolution to lodge congressional disapproval of Staff Accounting Bulletin (SAB) 121. A companion resolution was introduced in the Senate.
SEC's SAB 121 warned of risks unique to crypto custodians, hindering banks from safeguarding crypto assets
SAB 121—published on the SEC website—outlines the opinions of SEC staff about the risks crypto custodians should consider and lays out the related disclosure requirements under federal securities laws. While the SEC positions SABs as guidance rather than formal rules, Flood argued on Monday that SAB 121 represents “both a change in policy and a change that’s controversial.” He said the SEC also bypassed the traditional SAB development process, which usually involves consultation with Federal banking agencies.
Resolution expresses Congress' collective sentiment, backed by Tom Emmer as SEC's critic
A resolution is not legally binding but expresses the collective sentiment of Congress. Tom Emmer (R-Minn.), arguably the SEC’s fiercest critic on Capitol Hill, backed Flood’s legislation on Monday, calling the “illegal” SAB 121 an example of the SEC’s attempts to claim regulatory authority over the crypto industry at large.
SEC's lawsuits against major crypto companies under scrutiny amidst legislative action
The SEC has targeted several of the largest crypto companies —from exchanges and other custodial service providers to software development teams—with lawsuits, including Coinbase, Binance, Kraken, Uniswap Labs, and Robinhood. If the joint resolution, designated H.J.Res.109, passes its floor vote in the House tomorrow, it must still await the fate of its companion resolution in the Senate, S.J.Res.59, which has not yet been passed out of committee. It would become law with a two-thirds vote in both chambers.
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