In the United States, discussions among lawmakers revolve around the legality of the regulatory actions spearheaded by Gary Gensler's Staff Accounting Bulletin (SAB) 121, which stipulates guidelines for firms offering crypto custody services. The current discourse delves into the potential implications of this directive on conventional financial institutions seeking entry into the realm of crypto asset custody.

Rolled out in 2022, the SEC's Staff Accounting Bulletin 121 dictated that firms interested in providing crypto services must incorporate these assets into their financial statements. This move sparked criticism within the crypto community, leading to apprehensions regarding the regulatory boundaries imposed by the financial overseer on the burgeoning sector.

Detractors argue that the imposition outlined in SAB 121 places a substantial burden on entities aiming to participate in crypto-related services, potentially hampering innovation and curtailing industry expansion. The ongoing debate surrounding this bulletin has galvanized US legislators, including Sen. Cynthia Lummis, Rep. Mike Flood, and Rep. Wiley Nickel, to propose resolutions intended to negate Gary Gensler's directive and challenge the SEC's regulatory stance.

Lawmakers aim to articulate official disapproval of the SEC's actions, probing the agency's authority to implement such policies sans prior congressional consent. The contention stems from the perception that the SEC sidestepped the essential legislative protocols in enforcing SAB 121, eliciting allegations of regulatory overreach and opacity in decision-making processes.

Despite facing a backlash, Gary Gensler and his SEC counterparts stand by SAB 121, underscoring its significance in upholding investor interests and ensuring accountability in the administration of custodial assets. The rationale underpinning this policy revolves around augmenting transparency and safeguarding user funds by addressing obligations linked to crypto assets held within a company's financial records.

The introduction of SAB 121 follows incidents such as the FTX collapse, triggering a reassessment of crypto regulations in the United States. While regulatory bodies contend that these measures are imperative for market stability, industry front-runners, including Coinbase, advocate for clearer directives to nurture investment and stimulate innovation within the country's crypto landscape.