Congressman Flood Pushes Back on Securities and Exchange Commission’s Overreach in Digital Assets Accounting

WASHINGTON, D.C. – Today,U.S. Congressman Mike Flood sent a letter to Securities and Exchange Commission (SEC) Chairman Gary Gensler raising concerns with Staff Accounting Bulletin 121 (SAB 121), which changed the way banks and financial institutions are expected to account for the custody of digital assets. 

“SAB 121’s treatment of digital assets differs from the existing accounting treatment of other assets held in custody, which are an off-balance sheet responsibility, and insured depository institutions already have a robust regulatory framework for the custody of assets,” Congressman Flood wrote. “I fear SAB 121’s requirement to put custodied assets on-balance sheet and the related knock-on effects are so burdensome that banking organizations would effectively be precluded from serving as digital asset custodians.”

SAB 121 was issued by the SEC on April 11, 2022.The Bulletin conveys the views of the SEC on requirements related to providing custody of digital assets.

Congressman Flood is a member of the Financial Services Committee. You can read the full letter here.