SEC, Gensler Face Criticism Over Crypto Custody Overstep

Lawmakers called the SEC and Chair Gary Gensler out for stringent regulatory actions against crypto assets custody in banking.

Very angry man shouting at a smiling Gary Gensler.
Created by Gabor Kovacs from DailyCoin
  • The Securities and Exchange Commission is once again under scrutiny.
  • Three U.S lawmakers have raised concerns about the SEC’s crypto custody policy.
  • The SEC chair has consistently upheld a rigorous stance towards the cryptocurrency industry.

The regulatory actions of the Securities and Exchange Commission (SEC), under the governance of Chair Gary Gensler, has repeatedly come under scrutiny, as lawmakers seek to modify the unfriendly standards set against the crypto industry. 

Now, three U.S lawmakers are seeking the obliteration of the commission’s established rule against crypto asset custody in banking.

Lawmakers Oppose SEC Crypto Custody Policy

On February 1, U.S representatives Mike Flood and Wiley Nickel, along with Senator Cynthia Lummis, introduced a Bipartisan Resolution to revoke the U.S. Securities and Exchange Commission’s Staff Accounting Bulletin (SAB) 121.

The lawmakers asserted that the Staff Accounting Bulletin prohibits banks from offering crypto custodian services to digital assets investors by mandating them to keep the managed assets on-balance sheet.

Highlighting the perceived regulatory overreach in the SEC’s standards, the lawmakers emphasized that SAB 121 is more a rule than an accounting bulletin.

“Gary Gensler and the Security and Exchange Commission continue to overstep their authority, and it's time for Congress to weigh in on Staff Accounting Bulletin No. 121,” Congressman Wiley Nickel emphasized. 

The proposed resolution has garnered Support from industry groups such as the American Bankers Association and the Bank Policy Institute, who jointly called for its reversal to ensure assets custodied by banks are kept off-balance sheet.

Representatives Mike Flood and Wiley Nickel are not the first to call the SEC Chair out on his regulations against the industry.

Enough of Gary Gensler?

In November 2023, Representatives Tim Burchett and Steve Womack condemned the SEC’s enforcement actions, asserting that it constitutes a financial drain on the United States. The lawmakers emphasized the commission’s overreach and aggressive regulatory approach, proposing a significant salary cut for chair Gensler to $1 annually.

Majority Whip Tom Emmer took it a step further in December, calling for the complete ousting of the SEC Chair.

The lawmakers asserted that the capital markets must be shielded from the tyrannical approach the Gensler continues to adopt, calling for the end of the abusive practices that have persisted during his tenure.

To find out about crypto SIM swapping in the industry, read here:
$400M FTX Hack Linked to SIM Swap Ring as DOJ Cracks Down 

Is a potential dismissal imminent for the SEC chair? Find out more?
“Fire Gary Gensler!” Lawmakers Endorse Act to Oust SEC Chair

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Author
Grace Abidemi

Grace Abidemi, a cryptocurrency reporter at DailyCoin, covers industry developments and trends. She previously worked as a freelance writer. With a Bachelor's degree in German Language and certifications in marketing and storytelling, Grace creates engaging content. When not working, she's in Nigeria, mastering cooking and canvas painting, and enjoys learning about different cultures and languages.