Lawmakers urge Biden administration to reconsider veto for SAB 121 repeal

Lawmakers are urging the Biden Administration to reconsider its plan to veto the congressional proposal to repeal the SEC’s controversial Staff Accounting Bulletin No. 121 (SAB 121). A bipartisan coalition of lawmakers sent a letter to the administration, calling on them to either convince the SEC to rescind the standard or sign the congressional proposal into law. The letter cites potential risks to consumers and the financial sector posed by the current accounting treatment mandated for digital assets. It argues that SAB 121 diverges from the accounting treatment of other asset classes and discourages regulated financial institutions from managing digital assets, thereby exposing consumers to heightened risks. The letter also criticizes the SEC for bypassing the traditional notice and comment rulemaking process, preventing stakeholders from providing input. The lawmakers highlight that it is within the SEC’s authority to revisit and rescind staff accounting bulletins, as most over the past three decades have involved revisions or rescissions. They argue that the bipartisan support for the congressional resolution expressing disapproval of SAB 121 demonstrates widespread opposition to the rule. The lawmakers urge President Biden to either sign the resolution into law or collaborate with the SEC to revoke the guidance. If Chair Gensler continues to uphold SAB 121, they warn that the disapproving resolution should be enacted into law or allowed to take effect. The ongoing debate over SAB 121 reflects broader tensions surrounding the regulatory treatment of digital assets and the role of financial institutions in managing them.