WASHINGTON, D.C.— Stephen Hall, Legal Director and Securities Specialist, issued the following statement on the release of Better Markets’ new Fact Sheet regarding SEC Staff Accounting Bulletin (SAB) 121 and a congressional resolution seeking to overturn it:
“SAB 121 provides that companies holding crypto assets for customers face unique risks and should therefore reflect those assets as liabilities on their balance sheets. Under the bulletin, banks would be among the entities anticipated to have capital to protect against the liabilities posed by crypto assets. This important guidance issued for the protection of investors and the markets is now the subject of a Congressional Review Act resolution, which would nullify the bulletin.
“When thinking about the CRA, a number of key considerations should be foremost in mind. Accounting standards are critical to the proper operation of the U.S. capital markets. Those markets are the envy of the world because they are well-regulated, which is why so many people around the world have the trust and confidence to invest their money in those markets. History shows, including by the Enron scandal and many others, that weak accounting can lead to financial disaster and undermine that confidence.
“It is therefore critical to consider whether Congress has the expertise to second-guess the judgment that the SEC has made in the bulletin regarding some highly technical accounting issues. And wouldn’t the CRA resolution set a dangerous precedent of nullifying accounting requirements that are designed and intended to protect investors, customers, markets, and financial stability—especially given the extraordinary and demonstrated risks that the crypto markets pose? Congress must carefully consider whether it wants to undo an important measure that helps protect investors as well as the entire financial system from the potentially disastrous consequences of another crypto-market meltdown. In our Fact Sheet, we highlight these and other considerations that should bear on any action targeting this important bulletin.”
You can find the fact sheet here.
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Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.org.
