Senator Cynthia Lummis and Congresswoman Patrick McHenry drew attention to the increased risk of losing client funds as a result of the collapse of cryptocustodian during the implementation of SAB 121 from SEC.
“In sum, the effect of SAB 121 is to deny millions of Americans access to safe and secure custodial arrangements for digital assets.”
My letter with @PatrickMcHenry here:https://t.co/kEQKJMg4tC
— Senator Cynthia Lummis (@SenLummis) March 2, 2023
Letter sent to FDIC, Fed, OCC and the National Credit Union Administration.
SAB 121 released in April 2022. The directive requires companies to recognize a liability and offset accordingly on the balance sheet based on the fair value of the customer’s digital assets held by the custodian.
Legislators cited the Celsius bankruptcy case. In it, the court classified all of the platform’s customers as unsecured creditors and thus placed them “last in line for the return of their assets.”
“SAB 121 turns decades of precedent around custody accounting for banks, credit unions and other regulated financial institutions,” the letter said.
Lawmakers have warned that requiring digital assets to be efficiently placed on balance sheets will lead to “massive capital spending.”
Lummis and McHenry also stated that SAB 121 does not provide a clear definition of digital assets.
“The volume of assets covered by this broad definition [бухгалтерский баланс компании]whether it is virtual currency, stablecoins, or even tokenized stocks, is unclear. […] A more detailed hierarchy is needed for this asset class that takes into account the opportunities and risks of digital assets,” the letter says.
Lawmakers urged agencies to clarify whether they plan to require entities under their control to comply with SAB 121 or whether they see it as a potential weakening of consumer protection.
On March 3, the head of the SEC, Gary Gensler, warned crypto exchanges about the inconsistency with the status of custodians.
Earlier, the chairman of the department said that crypto companies should “take note” of Kraken’s decision to close the staking program for US customers.
Recall that in early February, Gensler called the regulation of cryptocurrencies a priority in 2023.
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