October 31, 2023, marked the 15th anniversary of the release of the Bitcoin whitepaper, a seminal document that laid the foundation for developing the Bitcoin network.
Authored under the pseudonym Satoshi Nakamoto, the whitepaper outlined a decentralized digital currency’s key concepts and principles, igniting a revolution in finance and technology.
As the cryptocurrency community celebrated this significant milestone, Gary Gensler, the United States Securities and Exchange Commission (SEC) chair, made an intriguing statement regarding Satoshi Nakamoto’s identity.
Bitcoin Anniversary Surprise
In a recent post on X (Formerly Twitter), SEC’s chair Gensler posed a rhetorical question, wondering if Satoshi Nakamoto were to dress up as themselves for Halloween, would anyone be able to recognize them? The remark reflected the mystery surrounding the true identity of the enigmatic figure behind Bitcoin’s creation.
But beyond the anniversary of the Bitcoin whitepaper, Gensler’s statement also carried a message to crypto participants. Gensler took the opportunity to emphasize the importance of investor protection and compliance with securities laws within the crypto industry.
Gensler urged crypto companies to prioritize transparency and adherence to regulatory frameworks, warning against deceptive practices that may “mislead or harm investors.”
SEC Violated Congressional Review Act In Crypto Custodian Rules
In a recent development, the United States Government Accountability Office (GAO) has determined that the SEC violated the Congressional Review Act (CRA) by failing to seek congressional approval for its Staff Accounting Bulletin No. 121 (SAB 121).
According to Eleanor Terret, FOX Business reporter, the bulletin, which mandates that cryptocurrency custodians record customers’ digital assets as liabilities on their balance sheets, was classified as a “rule” rather than mere “guidance” by the GAO.
On March 31, 2022, the SEC issued SAB 121, providing interpretive guidance for covered entities on accounting and disclosure requirements related to custodial obligations for safeguarding crypto assets held on behalf of platform users.
The GAO’s decision highlighted that the SEC did not adhere to the CRA’s provisions, which mandate that agencies submit a report on a rule to the House of Representatives, the Senate, and the Comptroller General before it can take effect.
By disregarding the CRA’s provisions, the SEC has placed itself in violation of the act. The CRA establishes procedures for congressional review, enabling Congress to disapprove of agency rules.
The classification of SAB 121 as a rule with regulatory implications carries significant ramifications for the SEC’s authority in enforcing the bulletin’s requirements. The GAO’s decision underscores the need for regulatory agencies to follow established protocols and seek appropriate approval from Congress when implementing rules that impact the industry.
The SEC may now face pressure to rectify its violation of the CRA by submitting SAB 121 to Congress for review and approval.
Featured image from Shutterstock, chart from TradingView.com