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GOP lawmakers write to regulators on digital assets
House Financial Services Committee Chairman Patrick McHenry, R-N.C., and Sen. Cynthia Lummis, R-Wyo., wrote to federal banking regulators with concerns over a recent bulletin from the Securities and Exchange Commission (SEC), which tells cryptocurrency platforms that they should consider their customers’ digital assets when performing risk analyses.
The letter was sent to NCUA Chairman Todd Harper, Federal Reserve Vice Chair Michael Barr, Federal Deposit Insurance Corporation Chair Marty Gruenberg, and Acting Comptroller of the Currency Michael Hsu. McHenry and Lummis outlined how the SEC Staff Accounting Bulletin (SAB) 121 could apply to and potentially restrict regulated financial institutions.
“Since SAB 121 purports to require banks, credit unions and other financial institutions to effectively place digital assets on their balance sheets, it would trigger a massive capital charge. This in turn is likely to prevent these prudentially regulated entities from engaging in digital asset custody,” McHenry and Lummis wrote. “To the contrary, we should be encouraging prudentially regulated financial institutions, like banks and credit unions, to provide digital asset services precisely because they are subject to the highest standards of capital, liquidity, recovery and resolution, custody, cyber-security, and risk management.”
Of note, McHenry created the first congressional subcommittee to deal with cryptocurrency. Additionally, McHenry and Lummis are working on legislation to regulate digital assets, which McHenry highlighted as part of his goals this Congress in an exclusive Q&A with NAFCU.
NAFCU continues to stress the need for a clear regulatory framework for cryptocurrency and other financial technologies to lawmakers and regulators. The association supports innovation with these technologies, but has flagged concerns related to financial system safety and soundness, transparency, and appropriate disclosure of risk without the appropriate framework.