US lawmaker Wiley Nickel has taken a strong stance against the Securities and Exchange Commission (SEC) in urging for the repeal of Staff Accounting Bulletin 121 (SAB 121). This regulation has been met with criticism from various stakeholders in the financial industry, who argue that it hinders the growth of the crypto sector. Despite this opposition, President Joe Biden has made it clear that he would veto any attempt to overturn SAB 121, citing concerns about investor protection.
Bipartisan Support for Repeal
However, despite President Biden’s stance, there has been a growing bipartisan support for the repeal of SAB 121. A non-partisan House of Representatives recently passed a resolution rejecting the regulation, signaling a shift in sentiment towards the directive. Lawmaker Wiley Nickel highlighted the importance of withdrawing the directive in order to allow American banks to participate in the custody of digital assets at a larger scale. He emphasized that the current regulation hampers the mission of the SEC to protect investors, rather than serving their best interests.
Nickel also raised concerns over the potential concentration risk that the current regulation poses to the financial system. By limiting highly regulated American banks from holding digital assets in custody, investors are pushed towards offshore alternatives. This, in turn, creates a reliance on a single non-bank entity for custody services, which could have detrimental effects on the overall stability of the financial system. Additionally, the restriction inhibits banks from participating in the custody of newly introduced Bitcoin ETFs, further hindering the sector’s growth and development.
Furthermore, Nickel criticized the SEC for bypassing the rulemaking process in issuing SAB 121. He argued that the Staff Accounting Bulletin should be used to clarify existing policies, not create new ones. The SEC’s approach towards the digital assets industry has been viewed as hostile and counterproductive to the goals of President Biden. By imposing restrictions that limit the participation of American banks in the custody of digital assets, the SEC is hindering innovation and growth in the sector.
The repeal of SAB 121 is crucial for the growth and development of the crypto sector. By allowing American banks to participate in the custody of digital assets at scale, the SEC can better fulfill its mission of protecting investors while fostering innovation and competition in the financial industry. It is imperative that bipartisan support for the repeal continues to grow, in order to ensure a thriving and competitive market for digital assets in the United States.