House Representative spearheading SAB 121 vote, pledges to reverse crypto custody regulation

A bipartisan push to overturn a longstanding accounting rule has been led by Congressman Mike Flood, with the aim of making it easier for banks to provide cryptocurrency custody services.

The Securities and Exchange Commission's (SEC) SAB 121 accounting rule, introduced in 2003, requires banks to put assets under custody on their balance sheet. This practice, unconventional in banking, affects compliance with bank balance sheet rules and has been a contentious issue in the crypto industry.

The rule has been a point of contention for several years, with critics arguing that it makes it prohibitively expensive for banks to provide crypto custody. This, in turn, may limit the growth of the crypto industry.

Last year, Flood led a House vote to overturn SAB 121, a move that was later vetoed by President Biden. The veto was a setback for those advocating for change, but Flood has vowed to continue his efforts, particularly with the upcoming appointment of a new SEC Chair.

The new SEC Chair, yet to be determined, will be a key player in this saga. According to recent reports, Paul Atkins, a former SEC commissioner, is expected to take on the role. Flood has expressed his intention to work with Atkins to overturn SAB 121 permanently.

The issue inhibits innovation on the tokenization front, a field that has the potential to revolutionise various industries. By removing SAB 121, banks could potentially offer more services to the crypto sector, fostering growth and innovation.

The overturn of SAB 121 could have far-reaching implications for the crypto industry. Pro subscribers have access to complete articles, exclusive industry analysis, and early access to legislative updates on this developing story.

House Representative spearheading SAB 121 vote, pledges to reverse crypto custody regulation