According to Cointelegraph: Gary Gensler, the chairman of the U.S. Securities and Exchange Commission (SEC), faced intense scrutiny and criticism of the agency’s policies and actions during a House Financial Services Committee hearing on September 27. A significant portion of the session tackled the SEC’s Staff Accounting Bulletin (SAB) 121, a measure published in March 2022 regarding the accounting and disclosure of crypto assets held by public companies.
Critics, including Representative Mike Flood, took issue with the SEC’s process for publishing SAB 121. Flood highlighted that neither the Financial Accounting Standards Board (FASB) nor prudential regulators were consulted before the SAB’s release. He also revealed that at the time of SAB 121’s issuance, the FASB had not addressed digital asset custody standards.
Furthermore, Flood disputed Gensler’s claim that SAB 121 provided guidance based on existing SEC rules, stating there were no specific rules on custody of digital assets when the bulletin was released. This discrepancy led Flood to assert that either the SEC knew there was no strong justification for issuing the guidance and did so anyway, or the issuance was a mistake.
The SAB 121 has faced opposition since its release, with adverse responses from SEC Commissioner Hester Peirce, as well as letters of concern sent to Gensler by a group of senators and the Financial Services Committee members, claiming the bulletin was a form of disguised regulation.
Apart from the SAB 121 discussions, topics such as the approval of spot Bitcoin exchange-traded funds, the SEC's handling of the Grayscale case, and an alleged lack of impartiality within the financial industry were covered during the hearing. Particularly notable were discussions on the interpretation of the Howey test, a standard used by the SEC to determine if an asset qualifies as a security.
