U.S. Securities and Exchange Commission (SEC) Commissioner Mark Uyeda advocates for the withdrawal of Staff Accounting Bulletin 121 (SAB 121), which sets guidelines for accounting crypto liabilities. He argues that the method of its issuance undermines the foundational checks and balances designed to prevent excessive administrative control. Despite bipartisan support for a resolution to repeal SAB 121, President Joe Biden vetoed the measure.
SEC Commissioner Advocates for Withdrawal of SAB 121 — Says Biden's Veto Was Unfortunate
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‘SAB 121 Ought to Be Withdrawn’
U.S. Securities and Exchange Commission (SEC) Commissioner Mark Uyeda has voiced concerns regarding the procedural method the SEC used to issue Staff Accounting 121 (SAB 121), which set forth guidelines for accounting crypto asset liabilities by companies acting as custodians.
The commissioner criticizes the approach of releasing it as a regulatory edict rather than through the standard rulemaking protocol under the Administrative Procedure Act (APA), which requires public input and ensures transparency, thus allowing for judicial review. He told Fox Business’ Eleanor Terrett on Tuesday:
Issuing SAB 121 by regulatory edict rather than rulemaking under the Administrative Procedure Act effectively avoids judicial review, which undercuts our system of checks and balances against an over-reaching administrative state.
Amid rising concerns that SAB 121 might deter financial institutions from providing custodial services for cryptocurrencies due to the stringent reporting requirements imposed, Congress passed H.J. Res. 109, a bipartisan resolution aimed at repealing SAB 121. However, President Joe Biden vetoed the resolution, thereby maintaining the enforceability of SAB 121.
SAB 121 plays a critical role in shaping the financial reporting standards for crypto assets. It specifically deals with the recognition and valuation of liabilities companies might incur while holding these assets on behalf of their clients, mandating these liabilities be reported at fair value.
Commenting on President Joe Biden’s veto of H.J. Res. 109 which aims to overturn SAB 121, Commissioner Uyeda said:
The veto of H.J Res. 109 was unfortunate. SAB 121 ought to be withdrawn.
What are your thoughts on SEC Commissioner Mark Uyeda’s critique of how SAB 121 was issued? Do you think SAB 121 should be withdrawn? Let us know in the comments section below.
