Senator Warren Supports SEC's Controversial SAB 121 Bulletin

By: Eva Baxter

Senator Elizabeth Warren expressed her support for the SEC's Staff Accounting Bulletin (SAB) 121 during a Senate hearing on May 16. The bulletin provides guidance on how companies dealing with crypto should account for risks such as hacks, theft, and the loss of crypto during bankruptcy.

Warren emphasized that SAB 121 clarifies the need for companies to disclose such risks without requiring crypto platforms to list customers’ assets on their balance sheet. This stance contrasts with Patrick McHenry's assertion that the bill mandates financial institutions to hold customers' digital assets on their balance sheet.

The opposition vote on HJ Res. 109 aimed to overturn the bulletin, which had been published over two years ago. Warren argued that the vote falls outside the timeframe permitted for congressional review and emphasized that the bulletin does not constitute a notice-and-comment rule; hence, it should not be subject to the Congressional Review Act. However, the US Government Accountability Office disagreed, considering SAB 121 a rule for CRA purposes in October 2023.

Despite the Senate’s significant majority vote to overturn SAB 121, President Joe Biden is expected to veto the resolution. The Senate's decision did not have enough majority to prevent the presidential veto, which must be executed within 10 days once the bill reaches the President’s desk.