U.S. Securities and Exchange Commission (SEC) Commissioner Hester Peirce has raised continued concerns about the SEC’s Staff Accounting Bulletin No. 121 (SAB 121).
Peirce’s comments came after a September 9 speech by SEC Chief Accountant Paul Munter, who confirmed that the Commission’s position on SAB 121 remains unchanged.
SEC’s unchanged position
Munter emphasized that the SEC staff’s opinion on the controversial SAB 121 has not changed, despite the growing attention surrounding the regulation. He explained that the staff believes that an entity should record a liability on its balance sheet to reflect its responsibility to protect digital assets held for others.
Munter stated that this approach provides investors with timely and relevant information to assess the risks of protecting crypto on behalf of others.
He noted that some exceptions apply. For example, bank holding companies that secure crypto with bankruptcy protection may not have to record liabilities. Additionally, broker-dealers who facilitate crypto transactions but do not control cryptographic keys may be exempt.
Munter’s views align with the SEC’s position, which states that SAB 121 aims to increase transparency and improve risk management in the rapidly evolving crypto industry.
Despite these intentions, SAB 121 has raised concerns within the industry, as many view the regulations as an overreach by the SEC. U.S. lawmakers voted to reverse the SEC’s guidelines earlier this year, but President Joe Biden vetoed the repeal.
Peirce’s Opposition
In response to Munter’s speech, Peirce took to social media platform X to reiterate her concerns about both the content and process of SAB 121. She urged others to share their thoughts on the policy with her via email.
Nate Geraci, president of the ETF Store, noted that the SEC appears to be resistant to allowing regulated financial institutions to take custody of digital assets.
He stated:
[The SEC] simply do not want to offer regulated financial institutions [with the] ability to store crypto. Evidently, [the Commission] prefer [the] company that they allowed an IPO and then took custody of the vast majority of the spot btc ETF assets.”
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