The GAO’s Game-Changing Decision
The Government Accountability Office (GAO) has just thrown a wrench into the SEC’s plans with a ruling that could change the crypto landscape. On October 31, they concluded that the controversial SEC Staff Accounting Bulletin 121 must be reviewed by Congress. Why is this significant? Because it’s like saying your annoying neighbor’s cat really does have to stay on a leash.
What’s the Bulletin About?
Issued back in March 2022, Bulletin 121 has been a thorn in the side for crypto advocates. It outlines how companies should account for crypto-assets held on behalf of users. Essentially, it advises exchanges like Coinbase and PayPal to treat users’ crypto as both liabilities and assets, thus flipping traditional accounting practices on their head. Imagine suddenly having to account for your friend’s cookie jar as both a liability (you owe them cookies) and an asset (your investment in snack-related goods)—not ideal for the fiscal balance.
The Legislative Barbecue: Who’s Cooking?
Senator Cynthia Lummis, a well-known crypto champion, set this whole process in motion. In August 2022, she sent a letter to the Comptroller General questioning whether the bulletin could be classified as a ‘rule’ under the Congressional Review Act (CRA). The GAO’s recent findings confirm her suspicions, essentially noting that the SEC might have broken some rules of its own. Like discovering your late-night snack is more of a state secret than you thought, this revelation is making some serious waves.
Responses and Reactions
The response to the bulletin was about as popular as eating soup with a fork. SEC Commissioner Hester Peirce criticized the bulletin for adding unnecessary risk to markets already struggling under heavy regulations. Meanwhile, more than just armchair critics tossed their hats in the ring; a cohort of Republican senators—including Lummis—expressed their displeasure directly to SEC Chair Gary Gensler. It’s as if Congress is suddenly more attuned to crypto than a cat is to the sound of a can opener.
What Comes Next?
While the GAO’s findings are recommendations, they carry weight. It’s like when your mom tells you that you should clean your room—you may not have to, but you probably should if you don’t want the lecture that follows. The SEC now has to navigate the scrutiny of Congress while reconsidering its accounting approaches—a prospect that could mean more breathing room for crypto businesses. The climax of this spectacle is yet to unfold, but if one thing is certain, Lummis is likely to keep swinging in the crypto corner.
