Senator Elizabeth Warren described support for the SEC’s Staff Accounting Bulletin (SAB) 121 during a senate hearing on May 16.
Warren asserted that the bulletin, which applies to companies that deal with crypto, is designed to provide accounting guidance.
She said that SAB 121 “simply clarifies” how companies should account for risks related to crypto and make such risks visible in their disclosures. Relevant risks include hacks, theft, and the loss of crypto when a safeguarding company enters bankruptcy.
She said:
“The vote today is about ensuring that the SEC is able to issue guidance that will help companies …. produce strong, consistent, timely and meaningful accounting disclosures”
Warren asserted that the bulletin does not require crypto platforms to add customers’ crypto to their balance sheet — a statement at odds with House Financial Services Committee Chairman Patrick McHenry, who previously said that the bill “requires financial institutions and firms that are safeguarding their customers’ digital assets to hold those assets on their balance sheet.”
Warren added that the bulletin does not make a platform the owner of its customers’ crypto.
Warren opposed vote
Warren made her comments before a senate vote on HJ Res. 109, which had the potential to overturn the bulletin. She opposed the vote itself, stating:
“ We should not be holding this vote, and all byitself that is a good enough reason to vote no.
Warren stated that because the SEC published its bulletin more than two years ago, the current vote falls outside the time limit for congressional review.
Warren also asserted that the matter is “far outside the scope” of the Congressional Review Act (CRA) because the bulletin is not a notice and comment rule. She said the CRA does not apply to staff bulletins and that such bulletins do not even have the force of law.
Contrary to Warren, the US Government Accountability Office (GAO) determined SAB 121 to be a rule for the purposes of the CRA in October 2023.
Presidential veto expected
A significant majority of the Senate voted to overturn SAB 121 on May 16 after the House of Representatives voted to advance HJ Res. 109 on May 8.
President Joe Biden intends to veto the resolution. The Senate vote did not produce a significant enough majority to prevent the presidential veto.
Biden must veto the bill within 10 days of it reaching his desk.
