Cynthia Lummis and the Crypto Crusade
In a significant win for cryptocurrency advocates, U.S. Senator Cynthia Lummis has once again shone a light on the regulatory landscape surrounding digital assets. The recent ruling from the Government Accountability Office (GAO) on October 31 has ruffled a few feathers at the U.S. Securities and Exchange Commission (SEC).
The GAO’s Surprising Decision
The GAO decided that the controversial Staff Accounting Bulletin (SAB) 121, released in March 2022, should indeed be subject to congressional oversight. Senator Lummis had previously sparked this conversation by sending a letter to the U.S. Comptroller General back in August 2022, questioning whether the SEC’s bulletin fell under the Congressional Review Act (CRA).
What Does the Bulletin Say?
For those scratching their heads, the SEC’s bulletin aimed to prescribe how companies should account for obligations when safeguarding crypto-assets. It essentially argued that platforms like insert your favorite crypto platform here should treat users’ assets as both liabilities and assets. Talk about a mind-bending accounting practice!
GAO’s Findings
According to the GAO, the SEC’s bulletin, which reflects the staff’s interpretations rather than being an official rule, does indeed alter how companies approach their accounting. The commission itself even admitted that these bulletins are not officially sanctioned, which leaves many to wonder if the SEC is just playing with words.
- The bulletin represents a shift in the accounting game for custodied assets.
- It suggests specific practices without officially being a directive from the SEC.
The Fallout
The GAO’s ruling might sound like illegal fireworks for crypto enthusiasts, but it’s important to remember that GAO findings are just recommendations. Agencies may take them into account, but there’s no guarantee they will be followed.
The Response from the SEC
SEC Commissioner Hester Peirce was quick on the draw to criticize the bulletin, asserting that the agency itself had contributed to some of the risks the bulletin sought to address. Meanwhile, a coalition of Republican senators, including Lummis, expressed their disdain for what they termed the SEC’s “backdoor regulation.”
“This bulletin changes everything for how we think about custody and accounting for crypto-assets.” – Anonymous Senator
Conclusion: A Step Forward for Crypto?
This GAO conclusion marks another battle in the ongoing tug-of-war between crypto proponents and regulatory bodies. While many are celebrating this as a small victory for the crypto community, the bigger showdown lies ahead. Can this newfound scrutiny lead to a more reasonable regulatory environment, or will it fizzle out like a damp firecracker?
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