Amidst the looming Senate vote, US lawmaker Wiley Nickel has called upon Securities and Exchange Commission (SEC) Chair Gary Gensler to repeal the controversial Staff Accounting Bulletin 121 (SAB 121). This directive mandates financial institutions to include crypto assets on their balance sheets, a move criticized by numerous stakeholders who argue it stifles growth within the sector.

Despite opposition from various quarters, President Joe Biden has firmly stated his intention to veto any attempts to overturn SAB 121. The administration's stance underscores its commitment to supporting the SEC's efforts in safeguarding crypto investors.

However, bipartisan support for repealing SAB 121 has gained momentum, culminating in a recent resolution passed by the non-partisan House of Representatives. In his letter to the SEC Chair, Nickel highlighted the need to withdraw the directive in light of this growing support.

Nickel emphasized that SAB 121 runs contrary to the SEC's mission of investor protection, hindering regulated American banks from effectively custodying digital assets. He warned of the unintended consequences, including pushing US investors towards offshore custody solutions and impeding banks from participating in custody services for newly introduced Bitcoin ETFs. This, he cautioned, could potentially pose a concentration risk to the financial system, with many issuers relying on a single non-bank entity.

Furthermore, Nickel criticized the SEC for bypassing the rulemaking process in implementing SAB 121, arguing that the Staff Accounting Bulletin is meant to clarify existing policies, not establish new ones. He expressed concern over the SEC's perceived hostility towards the digital assets industry, suggesting that such actions could undermine President Biden's broader agenda.

In summary, Nickel urged the SEC to reconsider its stance on SAB 121, highlighting the need for a regulatory framework that fosters innovation and growth while ensuring investor protection. As bipartisan support for repealing the directive continues to gain traction, the SEC faces mounting pressure to address concerns raised by stakeholders and lawmakers alike.