Senator Elizabeth Warren described her support for the SEC’s Staff Accounting Bulletin (SAB) 121 during a Senate hearing on May 16.
Warren claimed that the bulletin, which applies to companies involved in crypto, is intended to provide accounting guidance.
She said SAB 121 “simply clarifies” how companies should consider risks associated with crypto and make such risks visible in their disclosures. Relevant risks include hacks, theft and the loss of crypto when a security company goes bankrupt.
She said:
“Today’s vote is about ensuring that the SEC can issue guidance that will help companies…. produce strong, consistent, timely and meaningful accounting disclosures”
Warren claimed that the bulletin does not require crypto platforms to add customers’ crypto to their balance sheets – a statement that contradicts Chairman of the House of Representatives Committee on Financial Services Patrick McHenry, who previously said the bill “requires financial institutions and companies that protect their customers’ digital assets to keep those assets on their balance sheets.”
Warren added that the bulletin does not make a platform the owner of its customers’ crypto.
Warren opposed the vote
Warren made her comments before a Senate vote on HJ Res. 109, which had the potential to undo the bulletin. She opposed the vote itself, stating:
“ We should not be having this vote, nor should weThat in itself is a good reason to vote no.
Warren stated that because the SEC issued its bulletin more than two years ago, the current vote falls outside the time limit for congressional review.
Warren also claimed that the issue falls “well 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 employee bulletins and such bulletins do not even have the force of law.
Unlike Warren, the U.S. Government Accountability Office (GAO) determined in October 2023 that SAB 121 is a rule for purposes of the CRA.
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 plans to veto the resolution. The vote in the Senate did not produce a large enough majority to prevent the presidential veto.
Biden must veto the bill within 10 days of it reaching his desk.
