US Senate May Repeal SEC's Crypto Custody Rule

By: Eliza Bennet

US legislator Wiley Nickel has called upon the Securities and Exchange Commission (SEC), under Gary Gensler's leadership, to repeal the Staff Accounting Bulletin 121 (SAB 121) before a crucial Senate decision. SAB 121 mandates that financial bodies holding cryptos must reflect these assets in their balance sheets. Many stakeholders assert that this regulation is detrimental to the sector's growth.

President Joe Biden, however, expressed his opposition to overturning SAB 121, citing the need to protect crypto investors. Despite this, a non-partisan resolution opposing the controversial regulation was passed by the House of Representatives last week.

Nickel advised a prudent move would be to withdraw the directive, citing rising bipartisan support for the upcoming Senate judgement. He pointed out that the resolution created a potential concentration threat for the financial system as most issuers rely on a single non-bank institution.

Finally, Nickel criticized the SEC for bypassing the rulemaking process while issuing SAB 121. He argued that such a process was meant for clarifying existing policies and not for creating new ones.