Press Releases

WASHINGTON, D.C.- Rep. Trey Hollingsworth (IN-09) led a letter, joined by fellow House Financial Services Committee Republicans, to U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler expressing concerns over the SEC’s Staff Accounting Bulletin 121 (SAB 121).

SAB 121 offered SEC staff’s interpretive guidance on the accounting treatment of custodied digital assets. The SEC completely circumvented the proper rule making channels including public comment from industry experts. SAB 121 would completely alter the accounting rules related to the custody of digital assets, requiring banks and other custody providers to record digital assets as a liability on their balance sheets. This would potentially discourage industry participation in the growing digital asset market, reduce innovation, and limit products available in the market. Rep. Hollingsworth’s letter highlights these concerns and requests Chair Gensler to withdraw SAB 121. 

“Policy isn’t created in a vacuum. I strongly believe the SEC should withdraw this guidance not only because of the gross lack of transparency in drafting it but also because the extreme shift in reporting and regulatory requirements will put unnecessary strain on digital asset custody providers and potentially undermine growth and innovation in this space,” said Rep. Trey Hollingsworth.

“As written, this staff bulletin has the potential to distort and make custody of digital assets economically infeasible. While enforcement is an important function of the SEC, a more formal process is required to determine what impacts such accounting standards would have on the industry. We must demand both regulatory clarity and proper enforcement be determined through a more transparent process,” said Rep. Warren Davidson.

Earlier this week, Rep. Hollingsworth questioned Director Grewal of the SEC’s Division of Enforcement about SAB 121 during a House Financial Services Committee hearing, requesting clarification of the Director’s legal authority to enforce the guidance. Watch Rep. Hollingsworth’s full questioning here.

Read the letter here.