An upcoming House Appropriation budget could prevent the US SEC from enacting its controversial Staff Accounting Bulletin 121 (SAB 121).
FOX Business reporter Eleanor Terrett, who reported the news June 4, said the bill would prohibit the SEC from using appropriated funds to implement the rule. Appropriations allow agencies to make obligations and make payments from the U.S. Treasury Department for certain purposes.
One policymaker in the budget states:
“Prohibits the SEC from implementing or enforcing Staff Accounting Bulletin No. 121, which implements harmful digital asset requirements.”
It is unclear whether the budget will pass in its current form. The House of Representatives, which currently has a Republican majority, is likely to pass the appropriations bill at a hearing on June 5. However, the Senate, which has a Democratic and Independent majority, will have to negotiate its own appropriation bill against that of the House of Representatives.
According to Terret, there is democratic support for an earlier resolution with the same goal: HJ Res. 109 – means that the Senate can leave the rider in the budget.
The bill also aims to provide the SEC with $2 billion in total funding by 2025, as opposed to the $2.59 billion requested by SEC Chairman Gary Gensler.
Commissioner Uyeda supports the overthrow
Terret also reported that SEC Commissioner Mark Uyeda is in favor of repealing SAB 121 and that it was “unfortunate” that US President Joe Biden vetoed it HJ Res. 109.
Uyeda added that the SEC’s decision to implement SAB 121 through a regulatory edict circumvented regulations under the Administrative Procedure Act (APA) and thereby “undermined[ting] our system of checks and balances against an overreaching administrative state.”
Uyeda’s complaint echoes previous criticism from fellow SEC commissioner Hester Peirce, who said in 2022 that a bulletin was not the “appropriate vehicle” for relevant change.
Uyeda and Peirce objected to procedural shortcomings rather than the exact content of SAB 121. Peirce said the decision itself “may be appropriate.”
Attempts at overthrow failed
SAB 121 requires financial institutions and other companies that protect customers’ digital assets to record the assets on their balance sheets. The approach to accounting and disclosure is demonstrably high capital and liquidity costs for those companies.
The U.S. House and Senate voted to pass HJ Res. 109 and destroys the bulletin, after which the Senate adopts the resolution on May 16.
However, on May 31, Biden vetoed the resolution over concerns that it would undermine the SEC and endanger consumers and investors.
Biden’s veto was met with resistance as lawmakers from the House of Representatives, the American Bankers Association and other groups urged Biden to sign the resolution into law.