US Congress Kicks Against SEC’s SAB 121 Rules in Latest Memo

Ad Disclosure
Ad Disclosure

We believe in full transparency with our readers. Some of our content includes affiliate links, and we may earn a commission through these partnerships. However, this potential compensation never influences our analysis, opinions, or reviews. Our editorial content is created independently of our marketing partnerships, and our ratings are based solely on our established evaluation criteria. Read More
Last updated:
Ad Disclosure
Ad Disclosure

We believe in full transparency with our readers. Some of our content includes affiliate links, and we may earn a commission through these partnerships. However, this potential compensation never influences our analysis, opinions, or reviews. Our editorial content is created independently of our marketing partnerships, and our ratings are based solely on our established evaluation criteria. Read More
Author
Jimmy Aki
Author Categories
About Author

Jimmy has nearly 10 years of experience as a journalist and writer in the blockchain industry. He has worked with well-known publications such as Bitcoin Magazine, CCN, and Blockonomi, covering news...

Last updated:
Why Trust Cryptonews
Cryptonews has covered the cryptocurrency industry topics since 2017, aiming to provide informative insights to our readers. Our journalists and analysts have extensive experience in market analysis and blockchain technologies. We strive to maintain high editorial standards, focusing on factual accuracy and balanced reporting across all areas - from cryptocurrencies and blockchain projects to industry events, products, and technological developments. Our ongoing presence in the industry reflects our commitment to delivering relevant information in the evolving world of digital assets. Read more about Cryptonews
Ad DisclosureWe believe in full transparency with our readers. Some of our content includes affiliate links, and we may earn a commission through these partnerships. Read more
SAB 121
Source: AdobeStock

The US Securities and Exchange Commission’s (SEC) latest release of its Staff Accounting Bulletin (SAB) 121 is receiving major backlash from legislators.

Making their opinions heard in a memo dated November 15, several members of the US Congress wrote to the Chairman of the FDIC Board, Acting Comptroller of the Currency Michael Hsu, and other key financial authorities.

They aim to draw attention to the SEC’s SAB 121 ruling published on April 11, 2022.

Providing context, the band of senators stated that the SAB 121 only came into public scrutiny following a Government Accountability Office (GAO) finding, which showed that the SEC’s directive was a rule meant for the Congressional Review Act.

SAB 121 is a rule introduced by the SEC, mandating financial institutions, credit unions, and banks offering crypto custodial services to keep a specified amount of funds backing their customers’ digital assets.

Countering this directive, the US Congress unequivocally stated that the SAB 121 rule should not have any legal effect on the stated financial institutions.

Hence, these entities are not mandated to acknowledge liability and corresponding asset offsets on their balance sheets.

Providing reasons for disapproving the SAB 121 ruling, the senators stated that it was never submitted to Congress or the GAO, even though it meets the requirement of being a rule under the Administrative Procedure Act (APA).

Furthermore, SAB 121 was not published in the Congressional Record, which is the required step consistent with the Congressional Review Act (CRA).

In the event the SAB 121 rule is allowed to stand, the memo stated that it could kickstart a troubling precedent that can create regulatory gamesmanship to sidestep the APA.

This allows the SEC and other government agencies to gain regulatory authority over institutions that the US Congress has not authorized.

Rounding up the memo, the US Congress asked the FDIC Chairperson and other financial authorities to provide needed clarity and guidance to showcase that the SAB 121 ruling should not be enforceable.

Lummis and Other Senators Backing SAB 121 Annulment

Spearheading this legal tussle is pro-crypto Senator Cynthia Lummis, who first brought up the issue in August 2022.

Other members of Congress, including Senator Kirsten Gillibrand and Representatives Patrick McHenry and French Hill, have also expressed their concerns about the legality of SAB 121.

Over the past two and a half years, the US SEC has significantly intensified its efforts to regulate the crypto space, coinciding with the tenure of former crypto and blockchain professor Gary Gensler as the head of the government agency.

Gensler has stated that several crypto assets are, in fact, securities and has taken legal steps against several cryptocurrency trading firms in the industry.

This regulatory approach has prompted platforms like Coinbase to explore opportunities in the UK and EU.

The centralized crypto exchange has since handpicked Ireland as its European base, seeking global expansion beyond the domestic scene.

More Articles

Podcast
Gregg Bell, SVP of HBAR Foundation, on Hedera, Creating New Investment Vehicles, Tokenization, and Creating the Trust Layer of the Internet | Ep. 408
2025-02-07 10:48:44
Ethereum News
Ether Outflows from Derivatives Exchanges Hit Highest Level Since August 2023, Signaling Bullish Trend
Ruholamin Haqshanas
Ruholamin Haqshanas
2025-02-07 08:51:10
Crypto News in numbers
editors
Authors List + 66 More
2M+
Active Monthly Users Around the World
250+
Guides and Reviews Articles
8
Years on the Market
70
International Team Authors