tl;dr
Pro-crypto Republicans are preparing to challenge the U.S. Securities and Exchange Commission (SEC) over its guidance on crypto custody services. They are seeking to rescind the current guidance, known as Staff Accounting Bulletin (SAB) 121, which they claim discourages banks from offering crypto cu...
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Pro-crypto Republicans are demanding the U.S. Securities and Exchange Commission (SEC) to rescind its guidance discouraging banks from offering crypto custody services. They are preparing to challenge the current guidance, known as Staff Accounting Bulletin (SAB) 121.
The House of Representatives will vote on a joint resolution to lodge congressional disapproval of SAB 121, with a companion resolution introduced in the Senate. Critics argue that the SEC's guidance imposes unnecessary risks and hampers competition in the digital asset ecosystem. If the resolution passes both chambers of Congress, it would become law.
On Wednesday, the House of Representatives will vote on Rep. Mike Flood’s joint resolution to lodge congressional disapproval of SAB 121. A companion resolution was introduced in the Senate. 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.
Flood argues that SAB 121 represents “both a change in policy and a change that’s controversial,” claiming that the SEC bypassed the traditional SAB development process, which usually involves consultation with Federal banking agencies.
Within SAB 121, the SEC warns of “technological,” “legal,” and “regulatory” risks unique to crypto-custodians, claiming they could have a “significant impact on the entity’s operations and financial condition.” Flood blames these warnings for keeping banks and broker-dealers away from safeguarding crypto assets.
Tom Emmer, a prominent critic of the SEC, backed Flood’s legislation, calling SAB 121 an example of the SEC’s attempts to claim regulatory authority over the crypto industry. Emmer argued that SAB 121 introduces unnecessary concentration risk into the digital asset ecosystem, making the markets less fair, orderly, and efficient.
If the joint resolution, designated H.J.Res.109, passes its floor vote in the House, it must still await the fate of its companion resolution in the Senate, S.J.Res.59. It would become law with a two-thirds vote in both chambers.
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