Andy Barr: “I thank the chairman for his leadership on this issue. Mr. Speaker, I stand in front of you today to support my friend…”

“I thank the chairman for his leadership on this issue. Mr. Speaker, I stand in front of you today to support my friend and colleague from Nebraska (Mr. Flood) and his CRA resolution to nullify the SEC's Staff Accounting Bulletin Number 121 which would eviscerate financial institutions' ability to provide custodial services for digital asset firms. In theory, under SAB 121, a bank could custody digital assets. However, the conditions set forth by SAB 121 make it impractical for any bank. This very fact has been noted by Federal Reserve Board Chair Powell who acknowledged it shifts away from traditional custodial practices as custodial assets receive off-balance-sheet treatment. SAB 121 overturns decades of precedent regarding the accounting assets for banks. If a bank decides to custody digital assets and adhere to SAB 121, then the on-balance-sheet requirement would have significant capital, liquidity, and other prudential consequences. This makes it difficult, at best, for regulated institutions to safeguard digital assets. The fact is that technological, legal, and regulatory risks cited in SAB 121 are already addressed by the legal and regulatory framework that applies to banks' custodial activities. Yet, SAB 121 did not account for that. Moreover, and disturbingly, the SEC did not consult with any of the prudential regulators before issuing this flawed guidance.…”