304 North Cardinal
St. Dorchester Center, MA 02124

Work Hours
Monday to Friday: 7AM - 7PM
Weekend: 10AM - 5PM

Empowering Progress: House Financial Services Committee Propels Legislation to Revoke SEC Bulletin, Liberating Banks for Crypto Custody Services-2024

Gary Gensler gives testimony to the House Financial Services Committee.

Shaping the Future: House Committee Advances Resolution Challenging SEC’s Crypto Custody Bulletin

The U.S. House Financial Services Committee has embarked on a noteworthy journey to redefine the regulatory framework governing crypto custody services. This transformative effort is evident in the committee’s proactive advancement of Resolution 109, a clear signal of their intent to challenge the standing SEC’s Staff Accounting Bulletin 121 (SAB 121). While there is notable bipartisan support for this initiative, doubts linger about its likelihood of successful passage in upcoming votes. These uncertainties add an intriguing layer to the ongoing discourse, leaving stakeholders and industry observers pondering the potential ramifications for the future dynamics of crypto custody regulations.

This legislative development underscores the complexity and fluidity of the regulatory environment surrounding digital assets. As Resolution 109 navigates the legislative process, the crypto industry and market participants are on high alert, keenly observing how this regulatory tug-of-war unfolds. The outcome of this deliberation holds the potential to shape not only the immediate landscape of crypto custody services but also to set a precedent for future regulatory decisions in the dynamic and rapidly evolving realm of digital assets.

Understanding SEC SAB 121 and Its Impact

SEC SAB 121 stands as a crucial regulatory factor shaping the involvement of banks in the U.S. crypto custody market. The House Financial Services Committee’s Resolution 109 seeks to contest the limitations imposed by SAB 121, alleging excessive authority on the part of the U.S. SEC. Representatives Mike Flood and Wiley Nickel contend that SAB 121 has, in essence, marginalized extensively regulated institutions from serving as custodians for digital assets. This viewpoint emphasizes the significance of the current regulatory discourse on crypto custody.

SAB 109: Establishing Financial Entities’ Responsibilities

Published by the SEC on April 11, 2022, SAB 109 establishes the framework for financial entities providing custody services for cryptocurrency assets. The bulletin mandates that such entities should reflect a liability on their balance sheets, outlining the obligation to safeguard crypto-assets for platform users. Resolution 109 considers this rule under the Congressional Review of Agency Rulemaking (CRA), seeking to render it without “force or effect.” This move aims to address concerns about the impact of SAB 121 on the participation of regulated entities in the crypto custody sector.

Resolution’s Path to Passage: Insights from Jake Chervinsky

Despite the advancement of Resolution 109 by the House Financial Services Committee, Jake Chervinsky, Chief Legal Officer of crypto venture capital firm Variant, offers a cautious perspective. Chervinsky highlights the challenging path ahead, expressing doubts about the resolution securing a House floor vote, navigating the Democratic Senate, and ultimately receiving the President’s approval. His insights shed light on the intricate political dynamics influencing the fate of crypto-related legislation.

Resolution’s Path to Passage: Insights from Jake Chervinsky

Notably, Better Markets, a nonprofit advocating for transparency in commodity markets, disapproves of the House Financial Services Committee’s actions. It emphasizes the technical nature of SEC’s Staff Accounting Bulletins, considering them products of extensive deliberation and the expertise of seasoned professionals. The organization raises concerns about Congress’s proficiency and understanding in dealing with these intricate matters, suggesting a potential source of controversy in the ongoing regulatory discourse.

Conclusion: The Unfolding Narrative of Crypto Custody Regulations

As Resolution 109 progresses through the House Financial Services Committee, the crypto industry and investors stand at a pivotal juncture in the evolution of regulatory measures. The looming potential of this resolution to reshape crypto custody regulations has cast an air of anticipation over the entire landscape. Despite existing skepticism regarding its passage, the ongoing discourse surrounding SEC SABs highlights the dynamic nature of the crypto environment. Investors and industry participants are on the edge of their seats, eagerly awaiting further developments and acknowledging the profound impact that regulatory decisions hold in sculpting the future landscape of crypto custody services.

Leave a Reply

Your email address will not be published. Required fields are marked *