SEC custody rule made crypto regulation a ‘political football’ — Rep. Nickel
The United States securities regulator has turned crypto regulation into a “political football,” and its “open hostility” isn’t helping President Joe Biden, says Representative Wiley Nickel.
In a May 15 letter to Securities and Exchange Commission Chair Gary Gensler, Nickel, a Democrat, claimed the regulator ran contrary to its mission to protect investors and breached its authority in trying to pass the controversial Staff Accounting Bulletin 121, or SAB 121.
SAB 121 is a proposed rule mandating that SEC-reporting entities custodying crypto must record those holdings as liabilities on their balance sheets.
Nickel claims it would prevent American banks from being able to custody crypto exchange-traded products at scale — which creates a “concentration risk” by handing more control over to non-bank entities,
The SEC’s “open hostility” toward the cryptocurrency industry “isn’t serving President Biden’s best interests,” he added.
“The SEC is turning cryptocurrency regulation into a political football and forcing President Biden to choose sides on an issue that matters to many Americans,” the North Carolina Representative wrote.
Nickel wants Gensler to withdraw SAB 121 but he is confident the Senate in its May 16 vote on the matter will pass a resolution invalidating the SEC’s proposed rule.
“I’m hopeful that this bipartisan, bicameral resolution will send a message: it’s time to adjust the SEC’s misguided approach to digital assets.”
The House of Representatives voted to pass a bill overturning SAB 121 last week.
The last stop for the bill before it could overturn the rule would be on Biden’s desk — who has said he would veto the bill should it make it that far.
Related: SEC’s Gary Gensler gets irked being asked about crypto
Nickel is worried that SAB 121 could result in many U.S. investors seeking offshore custody solutions which could prove “riskier” in the long run.
Many Republicans share his position, too, including U.S. Representative Tom Emmer, who said SAB 121 would make U.S. markets “less fair, less orderly and less efficient.”
The SEC’s statutory mission is to protect investors, facilitate capital formation, and maintain fair, orderly, and efficient markets.
Chairman Gensler is violating all three of these with his illegal SAB 121 rule. pic.twitter.com/Wky2K8zglR
— Tom Emmer (@GOPMajorityWhip) May 7, 2024
SAB 121 was introduced by the SEC in March, 2022.
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