Two United States lawmakers have criticized crypto accounting guidelines outlined by the national securities regulator, arguing they places crypto customers at greater risk of loss.<\/p>\n
The guidelines came from the United States Securities and Exchange Commission and became effective in April last year. <\/p>\n
The guidelines ask financial companies holding crypto for customers to recognize all digital assets they do not control as a liability. They also state that digital assets should be backed by a safeguarding asset. <\/p>\n
However, Senator Cynthia Lummis and Representative Patrick McHenry argued on March 2 that these guidelines will \u201clikely\u201d discourage regulated entities from engaging in digital asset custody, which is the opposite effect of what the regulator should be doing.\u00a0<\/p>\n
In a letter to ranking individuals with the Federal Reserve System, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation and the National Credit Union Administration, the lawmakers argued that while Staff Accounting Bulletin (SAB) 121 was intended to provide clarity on accounting treatment for digital assets, it carried negative side effects. They wrote: <\/p>\n
\u201cSAB 121 places customer assets at greater risk of loss if a custodian becomes insolvent or enters receivership, violating the SEC\u2019s fundamental mission to protect customers.\u201d<\/p><\/blockquote>\n
The lawmakers argue the effect of SAB 121 will be to \u201cdeny millions of Americans access to safe and secure custodial arrangements for digital assets.\u201d<\/p>\n
The lawmakers also disagreed with the \u201cbreadth of the \u2018digital asset\u2019 definition in SAB 121,\u201d arguing that \u201ca more nuanced hierarchy for this asset class which considers the opportunities and risks of digital assets with different functions is necessary.\u201d<\/p>\n