US Congress members urge financial authorities to invalidate SEC’s SAB 121

cointelegraph.com:

Several members of the United States Congress have submitted a memo urging key financial authorities, including the chair of the board of the Federal Deposit Insurance Commission and the acting comptroller of the currency, to provide guidance or take action clarifying that the U.S. Securities and Exchange Commission (SEC) Staff Accounting Bulletin 121 (SAB 121) is not enforceable following a recent Government Accountability Office (GAO) finding.

In the memo, the Congress members stated that SAB 121 should have no legal effect and that the federal banking agencies and National Credit Union Administration should not require banks, credit unions and other financial institutions providing custody services for digital assets to comply.

#NEW: Chairman @PatrickMcHenry & @SenLummis led a bipartisan, bicameral letter urging the prudential regulators not to enforce #SAB121.

The letter follows a @USGAO finding that the bulletin constitutes a "rule" for purposes of the CRA.

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SAB 121 states that the crypto assets of bank customers should be held on the bank’s balance sheet, reflecting the value of the assets and requiring capital to be maintained against them. Industry representatives and several U.S. lawmakers have argued that it jeopardizes the willingness of regulated banks to act as crypto custodians and treats crypto holdings differently than other assets.

The GAO determined that the SEC’s SAB 121 should undergo congressional review based on a letter from Senator Cynthia Lummis to the U.S. Comptroller General in August 2022. The evaluation focused on whether the bulletin qualifies as a rule under the Congressional Review Act. According to the act, an agency rule must be