Overview

• A bipartisan group of U.S. lawmakers, led by Sen. Cynthia Lummis, R-Wyo., and Reps. Mike Flood, R-Neb., and Wiley Nickel, D-N.C., has introduced a joint resolution to repeal the SEC's Staff Accounting Bill (SAB) 121, which mandates crypto custodians to report customer crypto holdings as liabilities on their balance sheets.
• The move comes after the Government Accountability Office found that the SEC failed to follow the Congressional Review Act when issuing SAB 121, making it potentially unenforceable.
• SEC Chair Gary Gensler defended SAB 121, stating it aligns with U.S. bankruptcy court precedents that crypto assets are not bankruptcy remote.
• Critics argue that SAB 121 undermines consumer protection, disincentivizes banks from providing custodial services for digital assets, and represents overreach by the SEC.
• The resolution must pass both chambers of Congress to become law, marking a significant bipartisan effort to regulate the SEC's approach to crypto custody.