Representative Wiley Nickel has criticized the United States securities regulator for causing unnecessary political tension and hindering President Joe Biden’s agenda. In a letter addressed to Securities and Exchange Commission (SEC) Chair Gary Gensler on May 15, Nickel, a Democrat, accused the regulator of deviating from its primary goal of protecting investors and overstepping its authority with the proposed Staff Accounting Bulletin 121 (SAB 121).
SAB 121, if implemented, would require SEC-reporting entities that hold cryptocurrencies to classify them as liabilities on their balance sheets. Nickel argues that this would restrict American banks from effectively offering custody services for crypto exchange-traded products, leading to a concentration of power in non-bank entities and creating a potential risk.
Nickel further asserts that the SEC’s antagonistic stance towards the cryptocurrency industry is not in President Biden’s best interest. He claims that the SEC is transforming crypto regulation into a political matter, putting pressure on President Biden to take a side on a topic that holds significance for many Americans.
Nickel has urged Gensler to withdraw SAB 121, although he is confident that the Senate will pass a resolution invalidating the SEC’s proposed rule in the May 16 vote. Last week, the House of Representatives voted in favor of a bill that would overturn SAB 121. However, should the bill reach President Biden’s desk, he has stated his intention to veto it.
Nickel is concerned that SAB 121 could drive U.S. investors to seek offshore custody solutions, which may pose long-term risks. Many Republicans, including U.S. Representative Tom Emmer, share his viewpoint, contending that SAB 121 would undermine fairness, orderliness, and efficiency in U.S. markets.
The SEC introduced SAB 121 in March 2022. The ongoing debate surrounding crypto regulation raises questions about the extent of SEC Chair Gary Gensler’s authority in shaping the industry’s future.