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House Republicans Challenge SEC’s Digital Asset Custody Rule
In a recent development, House Republicans have taken a stance against the SEC’s controversial rule pertaining to digital asset custody, denouncing it as an unwarranted extension of the agency’s powers. The issue in question, known as Staff Accounting Bulletin 121 (SAB 121), has drawn criticism for its perceived bias against the digital asset sector and for exceeding regulatory boundaries.
Representative Tom Emmer Criticizes SEC Chairman Gensler
During a press conference held on May 7, Representative Tom Emmer, a prominent Republican lawmaker, voiced his disapproval of SEC Chairman Gary Gensler’s leadership, accusing him of presiding over a period marked by “regulatory hypocrisy, inconsistency, and incompetence.” Emmer’s critique centered on the SEC’s handling of SAB 121, which he believes represents a significant overreach.
SAB 121, introduced by the SEC over two years ago under the guise of providing guidance, seeks to regulate how financial institutions safeguard digital assets owned by consumers. Critics argue that the rule constitutes an effort to expand the SEC’s jurisdiction without congressional oversight or public consultation, a move that Emmer and his colleagues find troubling.
Emmer contends that SAB 121 not only exceeds the SEC’s legal mandate but also undermines the integrity of digital asset markets by increasing concentration risk. This, he asserts, compromises market fairness and efficiency, potentially harming American investors and impeding capital formation in the process.
Moreover, the rule’s restrictions on US banks’ involvement in digital asset custody are seen as inhibiting domestic market competitiveness, as foreign institutions face fewer constraints. Emmer argues that this places American investors at a disadvantage and could hamper the growth of the digital asset ecosystem within the country.
In a pointed statement, Emmer emphasized the discrepancy between the SEC’s mission and its enforcement of SAB 121, saying:
“The SEC’s statutory mission is to protect investors, facilitate capital formation, and maintain fair, orderly, and efficient markets.”
House Republicans Seek to Repeal SAB 121
This week, House Republicans are gearing up to advance a resolution proposed by Congressman Mike Flood aimed at rescinding the controversial rule. They are calling for bipartisan support, underscoring the significance of fostering a robust digital asset environment in the United States. Emmer expressed hope that colleagues across the political spectrum would join forces in this endeavor.
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