Representative Wiley Nickel has accused the United States securities regulator of politicizing crypto regulation and causing harm to President Joe Biden. In a letter addressed to Securities and Exchange Commission (SEC) Chair Gary Gensler on May 15, Nickel, a Democrat, argued that the regulator’s actions were against its mission of safeguarding investors and constituted an overreach of its authority by attempting to pass the controversial Staff Accounting Bulletin 121 (SAB 121). SAB 121 is a proposed rule that would require SEC-reporting entities holding cryptocurrencies to record them as liabilities on their balance sheets. Nickel contended that this rule would hinder American banks from offering custody services for crypto exchange-traded products on a large scale, thereby increasing the concentration risk by granting more control to non-bank entities. He further stated that the SEC’s negative attitude towards the cryptocurrency industry was not in President Biden’s best interests, as it was turning crypto regulation into a political matter and forcing the President to take a side on an issue that is important to many Americans.
Nickel expressed his desire for Gensler to withdraw the SAB 121 proposal, but he remained confident that the Senate would pass a resolution invalidating the SEC’s rule in their vote on May 16. The House of Representatives had already voted in favor of a bill overturning SAB 121 the previous week. However, the final decision on whether to overturn the rule would rest with President Biden, who had stated that he would veto the bill if it reached his desk.
Nickel’s concerns about SAB 121 were centered on the possibility of U.S. investors seeking offshore custody solutions, which he believed could pose greater risks in the long term. Many Republicans, including U.S. Representative Tom Emmer, shared Nickel’s viewpoint, arguing that SAB 121 would undermine fairness, orderliness, and efficiency in U.S. markets.
Introduced by the SEC in March 2022, SAB 121 has sparked debates over whether SEC Chair Gary Gensler possesses the ultimate authority in crypto regulation.