Providing For Congressional Disapproval Of The Rule Submitted By The Securities And Exchange Commission Relating To "Staff Accounting Bulletin No. 121"
Mr. Speaker, I rise in support of the bipartisan resolution I am leading with my colleague across the aisle, Congressman Mike Flood. Mr. Speaker, our Congressional Review Act resolution to disapprove of the SEC's Staff Accounting Bulletin…
Mr. Speaker, I rise in support of the bipartisan resolution I am leading with my colleague across the aisle, Congressman Mike Flood.
Mr. Speaker, our Congressional Review Act resolution to disapprove of the SEC's Staff Accounting Bulletin 121 protects consumers, reinforces Congress' role in the rulemaking process, and pushes back on the SEC's hostility toward digital assets.
Mr. Speaker, SAB 121 makes the digital assets industry less safe for consumers. It prevents well-regulated banks from safeguarding digital assets that are owned by their clients. SAB 121 requires banks to place custody of digital assets on their balance sheets, contrary to how traditional assets are treated. This makes it nearly impossible for a bank to provide custody of digital assets at scale, leaving investors to rely on riskier, unregulated options.
Mr. Speaker, whether you love crypto or you hate it, you should want the most heavily supervised financial institutions who are experts at custodial banking to safeguard digital assets. We are also seeing this issue with SAB 121 play out in real time, the SEC's recent approval of spot bitcoin ETPs, which I pushed for, allows retail investors access to this asset class through a regulated product. However, most bitcoin ETPs are held by the same nonbank custodian. Notably, banks aren't serving as custodians for any of these products as they would with a traditional ETP. This could pose a risk to the safety and soundness of the financial system, a concentration of risk issue, for sure.
To make matters worse, Gary Gensler and the SEC deliberately sidestepped the customary regulatory process, amounting to an obvious overstep of the agency's authority.
Last October, the Government Accountability Office concluded that the SEC breached statutory rulemaking requirements by issuing SAB 121 as guidance rather than a rule, avoiding the notice and comment period. SABs are meant to serve as tools to interpret existing policies, not create brand-new policy like SAB 121.
Additionally, the SEC issued the rule without conferring with banking regulators, which is unacceptable given the SEC's lack of prudential authority over banking institutions. It is time for Congress to take action and conduct oversight of the SEC's missteps. We shouldn't have to resort to using a CRA to fix this issue, and Gary Gensler could re- issue this accounting bulletin
and work with stakeholders to find a solution, but, unfortunately, this is the only tool that we have left.
As with previously successful CRAs, the SEC will be able to re-issue its rule as long as it has made changes responding to statements made by Members in the Congressional Record.
Mr. Speaker, I ask my colleagues to support our bipartisan CRA of SAB 121, which will protect investors and the financial system, encourage innovation, bolster American competitiveness, and restore Congress' role in administrative rulemaking.