n the latest development in budget negotiations, the House Appropriations Committee has introduced a bill that targets the U.S. Securities and Exchange Commission's (SEC) controversial Staff Accounting Bulletin 121 (SAB 121). This legislation aims to restrict the SEC from using federal funds to enforce SAB 121, which has been widely criticized within the digital asset industry.
Budget Provisions and Political Dynamics
The appropriation bill, which is set to be heard on June 5, includes a policy rider explicitly prohibiting the SEC from implementing or enforcing SAB 121. This rule has imposed stringent accounting requirements on companies handling digital assets, requiring them to list these assets on their balance sheets, thereby affecting their capital and liquidity. Eleanor Terrett of FOX Business reports that the House, with its Republican majority, is likely to pass the bill, although it will face negotiations in the Senate, where Democrats and Independents hold sway.
Controversy Surrounding SAB 121
The controversy over SAB 121 is not just about its content but also the manner in which it was introduced. SEC Commissioner Mark Uyeda has criticized the SEC for bypassing standard rulemaking procedures under the Administrative Procedure Act (APA), which would typically involve public commentary. This method, according to Uyeda, undermines the system of checks and balances designed to prevent overreach by the administrative state.
Challenges and Opposition
The House and Senate had previously attempted to overturn SAB 121 through H.J. Res. 109, which successfully passed both chambers. However, President Joe Biden vetoed the resolution on May 31, citing risks to consumer and investor protection if the bulletin were rescinded. This veto has sparked further debate and pushback from various stakeholders, including lawmakers and the American Bankers Association, who argue that the SEC's requirements are unduly burdensome.
Ongoing Struggle Over Crypto Regulation
The ongoing legislative actions and the introduction of the appropriation bill reflect the complex interplay between politics, regulation, and the burgeoning crypto industry. As the Senate prepares to consider its version of the budget, the crypto community watches closely, hoping for a resolution that supports innovation while ensuring adequate consumer protection.
