SEC Custody Rule Turns Crypto to Political Football, Says Rep. Nickel

The Congressman representing Carolina, Representative Wiley Nickel, has stood up against the US Securities and Exchange Commission (SEC)’s crypto custody rule. Notably, the Senate has yet to pass its votes regarding the proposed crypto custody rule.

In a letter addressed to SEC Chair Gary Gensler, Rep. Nickel noted that the agency has turned crypto regulation into a “political football.” The Congressman said the regulator’s open hostility to the rule is unfavorable to President Joe Biden’s administration.

Congressman Urges for the Withdrawal of SEC’s Crypto Custody Rule

In the May 15 letter, Congressman Nickel called out to the SEC to withdraw its Staff Accounting Bulletin 121 (SAB121). Rep. Nickel pointed out that the SEC’s custody rule conflicts with its mission to protect US investors. 

Today, I sent a letter to @SECGov Chair Gary Gensler calling on the agency to withdraw its Staff Accounting Bulletin 121. Unfortunately, the SEC is turning #crypto into a political football & forcing @POTUS to unnecessarily choose sides on an issue that matters to many Americans. pic.twitter.com/F3L8fZSNR0

— Rep. Wiley Nickel (@RepWileyNickel) May 15, 2024

Further, he highlighted the ‘open hostility’ that the rule creates against crypto in the country. The rule prohibits US banks from engaging in custodial services for digital assets. 

According to Rep. Nickel, such a limitation could push investors to seek less regulated options outside the country, which poses more risks to customers’ funds and activities in digital assets. 

Additionally, Nickel noted that the SEC’s custody rule and activities are interfering with President Biden’s administration. Also, he said the agency’s hostility towards crypto isn’t in the President’s best interests as it forces him to choose sides on crucial issues such as digital assets regulation.

The SEC’s Custody Rule to Pass Senate Vote Before Enactment

The Senate will meet on May 16 to vote on SAB 121 for resolution. Nickel urges the SEC Chair to withdraw the rule, but he believes it will not pass the vote.

Nickel mentioned:

“I’m hopeful that this bipartisan bicameral resolution will send a message: it’s time to adjust the SEC’s misguided approach to digital assets.”

Last week, the House of Representatives voted to nullify the SAB 121. Through its votes, it passed a bill, H.J Res 109, overturning the SEC’s controversial crypto custody rule.

Other congressmen, in addition to Rep. Nickel, oppose SAB 121. According to Rep. Tom Emmer, the custody rule would reduce fairness, efficiency, and orderliness in the US financial market.

If the Senate passes the bill, it will proceed to the President for enactment. Before now, President Biden disclosed that he would veto the new SAB 121 if it reached his desk.

Moreover, on May 8, the White House released a statement regarding the passing of H.J. Res. 109. It revealed its strong opposition to members of the House of Representatives who seek to overturn SAB 121. 

Further, the presidency indicated that an overturn would sabotage the SEC’s efforts to protect investors in the digital asset markets. Also, it acknowledged that the regulator’s rule is a positive drive in safeguarding the broader financial system.