The Blockchain Association filed a Freedom of Information Act (FOIA) request to uncover if the US Securities and Exchange Commission (SEC) is secretly advising certain banks on how to bypass SAB121. This could allegedly mean providing special treatment for legacy banks.
Earlier, the association submitted a FOIA request to investigate the de-banking of crypto firms in the United States. It was linked to allegations about account closures and refusal to open new accounts.
FOIA request targets SEC’s possible favoritism
In an X post, the Blockchain Association posted that it has filed a FOIA appeal to dig into the possible correlation between the SEC and certain custody institutions with guidance on avoiding SAB121 requirements.
The commission’s “regulation by enforcement” is infamous, but this could signal a new strategy, added the association.
The association suggests that this move may signal a large carveout for a small number of legacy banks that leaves others without answers. This includes those that service the crypto industry. It mentioned that the SEC is targeting by regulation and is protecting legacy institutions from compliance with expensive rules.
The group alleges the watchdog continues to impose these same regulations against those institutions that service the digital asset industry and shield others. It claims that SAB121 is a punitive, arbitrary, anti-crypto accounting bulletin issued by the SEC.
SAB121, the SEC’s controversial accounting bulletin, is known for its harsh stance against crypto. It’s been widely criticized and both the House and Senate voted to strike it down. Issued by the SEC in 2022, it requires companies holding customers’ crypto to list it on their balance sheets. This could have huge capital implications for banks dealing with crypto clients.
Senate even joined the House of Representatives in order to erase the controversial bulletin in May. The Senate vote was a decisive 60 “Yeas,” which reflected a strong bipartisan stance against SAB121. In the end, US President Joe Biden vetoed the repeal of SAB121.
De-banking of the crypto industry
In March 2023, the Blockchain Association filed FOIA requests with the FDIC, Federal Reserve, and OCC. It wants to uncover documents on the de-banking of crypto firms. The group wanted to go after the allegations of unfair account closures and refusals to open new accounts. However, it tried to look into potential regulator actions linked to the failures of Signature, Silicon Valley Bank, and Silvergate.
Kristin Smith, CEO of Blockchain Association, shed light on the crucial role of the crypto industry. She stated that these are lawful businesses and should be treated like any other law-abiding business. She called out all the impacted crypto industry participants to come forward and submit their stories confidentially.