U.S. lawmakers argue SEC accounting policy places crypto customers at risk

cointelegraph.com:

Two United States lawmakers have criticized crypto accounting guidelines outlined by the securities regulator, arguing it places crypto customers at greater risk of loss.

The guidelines came from the United States Securities and Exchange Commission (SEC), which became effective in April last year.

The guidelines ask financial companies holding crypto for customers to recognize all digital assets they do not control as a liability. It also states that digital assets should be backed by a safeguarding asset.

Crypto companies must show liabilities equal to ALL customer crypto assets, according to SEC's new rule SAB 121 issued in March 2022.@coinbase complied for their Q2 filing and now shows an $88B "customer crypto liabilities" item. https://t.co/59029Pr2LE

However, Senator Cynthia Lummis and Representative Patrick McHenry argued on Mar. 2 that these guidelines will “likely” discourage regulated entities from engaging in digital asset custody, which is the opposite effect of what the regulator should be doing. 

In a letter to ranking individuals from the Federal Reserve System, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation  (FDIC) 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, claiming:

The lawmakers argue the effect of SAB 121 will be to “deny millions of Americans access to safe and secure custodial arrangements for digital assets.”

"In sum, the effect of SAB 121 is to deny millions of Americans access to safe and secure custodial arrangements for digital assets."⬇️⬇️ My letter with @PatrickMcHenry