Gary Gensler, chairman of the United States Securities and Exchange Commission, told the House Financial Services Committee hearing on Sept. 27 that he enjoys testifying before the committee. He had well over four hours of that pleasure that day, much of which was devoted to criticism of his agency’s policies and actions.
Among the long list of discontents, one of the most narrowly focused was Representative Mike Flood’s questioning regarding the SEC’s Staff Accounting Bulletin (SAB) 121, issued in March 2022. The SAB concerned accounting and disclosure of crypto assets in the custody of public companies such as banks and platforms like Robinhood and Coinbase.
Flood confirmed Gensler’s previous testimony to the committee that the SEC did not confer with prudential regulators before publishing the SAB. Nor had the Financial Accounting Standards Board (FASB), a private body that issues standards relating to Generally Accepted Accounting Principles (GAAP), issued anything related to digital asset custody, Flood continued. Rather, the FASB added digital assets accounting standards to its agenda in May 2022, after the publication of SAB 121.
Gensler said in a previous hearing that SAB 121 provides guidance on applying existing requirements under SEC rules, Flood reminded him. What requirements were there, Flood asked. Gensler replied that there is a rule from 2009 on the custody of digital assets by investment advisers, and the agency had “finalized something around special purpose broker-dealers,” Gensler replied. He was apparently referring to an SEC rule made in April 2021.
“There were no SEC rules on the books that directly addressed the topic of custody of digital assets,” Flood replied. A rulemaking on custody, including digital asset custody, was proposed in February 2023 and has not yet been finalized, he added, concluding:
“At the time when the bulletin was issued, there was no action by
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Author: Derek Andersen
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