{"id":79174,"date":"2023-11-01T00:29:52","date_gmt":"2023-11-01T04:29:52","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/crypto\/gao-criticizes-secs-handling-of-crypto-accounting-bulletin-calls-for-clearer-rule\/"},"modified":"2023-11-01T00:29:56","modified_gmt":"2023-11-01T04:29:56","slug":"gao-criticizes-secs-handling-of-crypto-accounting-bulletin-calls-for-clearer-rule","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=79174","title":{"rendered":"GAO Criticizes SEC&#8217;s Handling of Crypto Accounting Bulletin, Calls for Clearer Rule"},"content":{"rendered":"<div>\n<figure id=\"attachment_124517\" aria-describedby=\"caption-attachment-124517\" style=\"width: 1200px\" class=\"wp-caption alignnone\"><noscript><\/noscript><figcaption id=\"caption-attachment-124517\" class=\"wp-caption-text\">Source: iStock<\/figcaption><\/figure>\n<p>The Government Accountability Office (GAO) has determined that the Securities and Exchange Commission (SEC) erred in its handling of \u201cStaff Accounting Bulletin 121\u201d (SAB 121) by failing to submit it to Congress as is required for official rules.<\/p>\n<p>In a report titled \u201cSecurities and Exchange Commission\u2014Applicability of the Congressional Review Act to Staff Accounting Bulletin No. 121,\u201d released on October 31, the Government Accountability Office (GAO) has determined that the U.S. Securities and Exchange Commission (SEC) overstepped its bounds when issuing the controversial \u201cStaff Accounting Bulletin 121\u201d (SAB 121).<\/p>\n<p>The GAO contends that Congress should have been given the opportunity to review it.<\/p>\n<p>The GAO argues that the SEC did not comply with the Congressional Review Act (CRA) by failing to submit a report to Congress or the Comptroller General regarding the Bulletin. The GAO further highlights that the 2022 guidance, viewed by the industry as potentially impacting crypto investors\u2019 ability to secure safe harbors for their assets, should have been treated as a formal rule.<\/p>\n<p>Despite this determination, the GAO\u2019s finding does not directly alter the ongoing nonbinding status of the Bulletin as outlined by the SEC.<\/p>\n<p>The Congressional Review Act mandates that before a rule can take effect, an agency must furnish a report on the rule to both the House of Representatives and the Senate, in addition to the Comptroller General. If Congress chooses to disapprove of the rule, the CRA provides procedures for review and potential rejection.<\/p>\n<p>It is anticipated that the Bulletin will now undergo congressional review. The exact details of this process are yet to be clarified. Under the Congressional Review Act, lawmakers have a specified period to potentially reject a new federal rule once it has been submitted for review.<\/p>\n<p>In response to the GAO\u2019s opinion, the SEC stated, \u201cThe GAO opinion expresses its view that SAB 121 is a \u2018rule\u2019 for purposes of the CRA. The opinion does not otherwise affect the status of SAB 121.\u201d\n<\/p>\n<h2>GAO Challenges SEC\u2019s Classification of SAB 121, Asserting Influence on Crypto-Asset Accounting Practices<\/h2>\n<p>\nThe Government Accountability Office (GAO) has examined the SEC assertion that SAB 121 should not be considered a formal rule due to its characteristics as an \u201cagency statement\u201d lacking \u201cfuture effect.\u201d Contrary to the SEC\u2019s argument, the GAO has pointed out that SAB 121 provides recommendations for covered entities regarding best practices in accounting for their obligations related to safeguarding crypto assets.<\/p>\n<p>The GAO emphasizes that the Bulletin\u2019s guidance effectively encourages regulated entities to adapt their internal operations and policies in accordance with its recommendations.<\/p>\n<p>Additionally, as the Bulletin is published on the SEC\u2019s official website, covered entities reasonably interpret it as an expectation to consider the guidance when preparing their financial disclosures.<\/p>\n<p>Furthermore, the GAO notes that an SEC Commissioner acknowledged the Bulletin\u2019s role in providing definitive interpretive guidance for public companies, outlining detailed descriptions of expected disclosures. This reinforces the GAO\u2019s agreement with the characterization of the Bulletin\u2019s significant impact on covered entities\u2019 compliance expectations and internal practices.<\/p>\n<p>SEC Commissioner Hester Peirce, a notable figure within the Commission, had previously voiced her objections to the SEC\u2019s decision, characterizing it as a \u201cscattershot and inefficient approach to crypto.\u201d<\/p>\n<p>In conclusion, the GAO affirms that the Bulletin meets the Administrative Procedure Act\u2019s (APA) definition of a rule, and none of the three CRA exceptions apply. Therefore, it concludes that the Bulletin is subject to the CRA\u2019s submission requirement, signaling a pivotal development in its regulatory status.<\/p>\n<blockquote class=\"twitter-tweet\" data-width=\"550\" data-dnt=\"true\">\n<p lang=\"en\" dir=\"ltr\">The GAO reviewed this proposal at the request of a member of Congress. This will be brought up for a vote of disapproval. <\/p>\n<p>Each chamber of Congress now has until December 31 to pass a resolution of disapproval to invalidate the rule. <a rel=\"nofollow\" href=\"https:\/\/twitter.com\/DigitalChamber?ref_src=twsrc%5Etfw\">@DigitalChamber<\/a> will actively reach out to\u2026<\/p>\n<p>\u2014 Cody Carbone (@CodyCarboneDC) <a rel=\"nofollow\" href=\"https:\/\/twitter.com\/CodyCarboneDC\/status\/1719414357497364636?ref_src=twsrc%5Etfw\">October 31, 2023<\/a><\/p>\n<\/blockquote>\n<p>This finding paves the way for a congressional vote of disapproval, a prospect emphasized by Cody Carbone, Vice President of Policy for the Chamber of Digital Commerce. Each chamber of Congress now has until December 31 to deliberate and potentially pass a resolution of disapproval, which could ultimately invalidate SAB 121.<\/p>\n<div class=\"newsletter home-newsletter single\">\n<div class=\"left-side\">\n<p>\n        <em><br \/>\n            Enter your email for our Free Daily Newsletter        <\/em>\n    <\/p>\n<p> A quick 3min read about today&#8217;s crypto news!<\/p>\n<p>    <span class=\"response-msg\" id=\"newsletter-response\"><\/span>\n<\/div>\n<\/p><\/div>\n<\/p><\/div>\n<p><script async src=\"\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><br \/>\n<br \/>Read the full article <a href=\"https:\/\/cryptonews.com\/news\/gao-criticizes-secs-handling-of-crypto-accounting-bulletin-calls-for-clearer-rule.htm\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Source: iStock The Government Accountability Office (GAO) has determined that the Securities and Exchange Commission (SEC) erred in its handling of \u201cStaff Accounting Bulletin 121\u201d (SAB 121) by failing to submit it to Congress as is required for official rules. In a report titled \u201cSecurities and Exchange Commission\u2014Applicability of the Congressional Review Act to Staff [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":79175,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[243],"tags":[83],"class_list":["post-79174","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-crypto","tag-featured"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>GAO Criticizes SEC&#039;s Handling of Crypto Accounting Bulletin, Calls for Clearer Rule | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Source: iStock The Government Accountability Office (GAO) has determined that the Securities and Exchange Commission (SEC) erred in its handling of \u201cStaff\" \/>\n<meta name=\"robots\" content=\"index, follow, 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