The Securities and Exchange Commission’ Hester Peirce referred to the controversial crypto accounting guidance as a “pernicious weed,” condemning her organization’s strategy for overseeing the sector.
At the Practicing Law Institute’s two-day “SEC Speaks” event, the Republican commissioner specifically mentioned Staff Accounting Bulletin 121, citing her previous speech, known as the “SECret Garden,” referring to “the maze of staff guidance that serves to define practices across the securities industry in a way that may be inconsistent with a plain reading of the rulebook.”
As she typically does in remarks to the public, Peirce stated that her opinions are her own and not the SEC’s.
“Nobody can challenge the diktats because they’re not final agency action, but compliance is mandatory for anyone who is trying to avoid SEC delays, denials and enforcement and examination scrutiny,” Peirce stated on Tuesday.
She added, “So everyone nods along in silence. Staff Accounting Bulletin 121 and related oral guidelines are a particularly harmful weed that has emerged in that secret garden after I made that speech.”
Staff Accounting Bulletin 121, or SAB 121, was released in March 2022 and mandates that companies that hold cryptocurrency must list their clients’ holdings as liabilities on their balance sheets.
Over the past year, the bulletin has generated controversy due to worries in the cryptocurrency space that it would prohibit banks from holding digital assets. Last month, after a Congressional watchdog reported that the SEC required congressional consent before implementing SAB 121, lawmakers challenged the SEC and passed a motion to revoke the bulletin.
“The bottom line is that rules of such broad effect should be set by the full commission, not by the staff that reports only to the chairman,” Peirce stated.
Peirce also spoke generally on Tuesday about what she called the “dwindling of genuine commission engagement with the public.” When people and entities come to the SEC for feedback, concerns and questions — they’re too often met with “crickets,” Peirce said. Peirce stated that the bandwidth is not available to SEC officials.
“But the root of the problem is that the Commission discourages the staff from offering much more than shrugs, silence, slow walking, sighs,” Peirce stated. “The culture at the top of the SEC has changed and that has led to a change across the whole agency in the way we interact with the public.”
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