In late July, four members of Congress sent a letter to the U.S. Securities and Exchange Commission (SEC) requesting it retract a bulletin that advises on the accounting treatment of crypto assets. The SEC bulletin advises that public companies, as well as private companies combining with special purpose acquisition companies, report crypto assets as liabilities and provide additional disclosures regarding the value of those assets. This represents a departure from the practice of holding custodied assets in separate accounts outside the balance sheet. The congressmen warned that the change would make the custody of such assets by banks "economically infeasible" and claimed that the SEC failed to follow "proper process," such as providing a public comment period.
While SEC Commissioner Hester Peirce called the bulletin a "scattershot and inefficient" attempt to regulate crypto, SEC Chairman Gary Gensler argued that the measure will help protect investors amid a downturn in digital asset markets. Gensler defended the bulletin, SEC Staff Accounting Bulletin No. 121, advising that the bulletin follows the same process as the 120 bulletins before it in its mission to protect investors. Gensler reportedly characterized the bulletin as "advice" for companies seeking accounting guidance for crypto assets. The bulletin itself also notes that it is "interpretive guidance for entities to consider" and does not bear the agency's "official approval." Gensler reportedly noted that a bank's bankruptcy puts customers' digital assets at risk and that these assets "aren't well enough developed" and are "sufficiently different" from traditional assets such as stocks or bonds.
For more information, please refer to the following links:
- GOP Lawmakers Ask SEC To Kill Crypto Accounting Bulletin
- SEC's Gensler Defends Agency's Crypto Accounting Memo
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