As a seasoned financial analyst with over two decades of experience in navigating regulatory landscapes, I find myself increasingly intrigued by the ongoing saga between Gary Gensler and Congressman Nickel regarding SAB 121 accounting rules.
In simpler terms, during a hearing on Tuesday, Securities and Exchange Commission (SEC) head Gary Gensler declared that he has no intention of revoking the contentious SAB 121 accounting regulations. Congressman Wiley Nickel expressed concern over the SAB 121 accounting rules, suggesting that the SEC may have exceeded its jurisdiction and negatively impacted investors.
Representative Nickel expressed that after repeatedly contacting the Securities and Exchange Commission (SEC) regarding this issue, they have failed to respond to their appeals. He posed a question to the SEC chair, inquiring if he harbors any remorse for maintaining the contentious SAB 121 accounting regulations.
Gensler stated that due to bankruptcies such as FTX, Terraform, Celsius, etc., the SEC must maintain existing rules. He further noted that cryptocurrencies pose risks for businesses and thus it’s important to implement the Staff Accounting Bulletin (SAB) instead. “There’s a useful accounting Bulletin available,” Gensler added.
In breaking news, Gary Gensler has made it clear that he won’t promise to change the existing SEC rule which prohibits heavily regulated financial institutions from owning Bitcoin and other cryptocurrencies.
— Bitcoin Magazine (@BitcoinMagazine) September 24, 2024
It appears that the Securities and Accounting Bulletin (SAB) 121 has had a detrimental impact on the cryptocurrency sector, particularly on crypto custodians. The U.S. securities regulator has been utilizing this rule to compel regulated financial entities to reveal their assets held in custody.
This regulation has posed challenges for financial establishments, such as Custodia Bank and Silvergate Bank, which are favorable towards cryptocurrencies, in conducting their operations. It’s worth noting that the regulatory body recently waived the SAB 121 rule for BNY Mellon, a prominent banking corporation, allowing it to offer crypto custodial services to ETF issuers. The wider crypto community has largely voiced disapproval towards this decision, labeling it as unfair.
Gary Gensler Invented the ‘Crypto Asset Security’ Term
At Tuesday’s Congressional hearing, Representative Tom Emmer claimed that the SEC Chair, Gary Gensler, has coined the phrase “crypto asset security” as a means to hinder innovation in the cryptocurrency sector. He argued that Gensler has been strategically employing this term over the past three years to advocate for regulatory control through enforcement actions against cryptocurrencies.
As a researcher, I’d like to highlight that I’ve coined the term “crypto asset security.” It seems this term is not explicitly stated in existing statutes. Furthermore, I haven’t issued any formal interpretive guidance to clarify how “crypto asset security” could be defined within the context of the SEC.
Furthermore, Tommer expressed his view that Gensler’s approach to cryptocurrency regulations appears inconsistent, labeling him as “a potentially more destructive or unlawful chairman of the SEC in historical terms.
Additionally, Emmer raised doubts about the SEC’s management of the Debt Box case, where the commission took legal action against a cryptocurrency venture for an alleged fraudulent scheme worth $50 million. However, the charges against Debt Box were dropped on May 28, leading to the SEC being mandated to pay approximately $1.8 million in costs.
The SEC Chair acknowledged that his office handled the situation badly.
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2024-09-25 11:36