“For many years, the Commission has refused to provide regulatory guidance on how our regulations apply to crypto assets, despite many appeals, leaving some of the blame for the lack of legal and regulatory clarity on us.”
The Securities and Exchange Commission has issued a Staff Accounting Bulletin regarding accounting for crypto asset protection obligations a company holds for platform users.
The bulletin reflects the staff’s evolving view on accounting for crypto asset protection obligations that an entity holds for its platform users. The staff determined that affected entities should recognize a liability and a corresponding asset on their balance sheets at fair value due to the risks specific to crypto assets.
In support of this position, the staff highlight technological, legal and regulatory risks associated with securing crypto assets and “an increased risk of financial loss.”
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In response to the Staff Accounting Bulletin, SEC Commissioner Hester Peirce expressed concern, not about the accounting provision itself, which might be appropriate, but about how the change will be made.
Commissioner Peirce first recalled that these risks are not new and the SEC is already aware of them. She then criticized the fact that the SAB does not recognize the Commission’s own role in creating the legal and regulatory risks that justify this accounting treatment.
“For many years, the Commission has refused to provide regulatory guidance on how our regulations apply to crypto assets, despite many appeals, leaving some of the blame for the lack of legal and regulatory clarity on us. Some recognition of the Commission’s own role in creating the conditions staff point to as justification for the SAB would be appropriate.”
Ripple’s General Counsel Stuart Alderoty divided Hester Peirce’s comments on Twitter were followed by a “fire” emoji, which is believed to mean “to burn” in this context.
Ripple is approaching summary judgment in a reasonable amount of time as Judge Analisa Torres ordered both parties to agree on a timeline for the meeting. The defendants want opening briefs on May 22, but the plaintiff holds “it is premature” and is likely trying to stretch the XRP lawsuit as much as possible, as time is the best weapon against Ripple in this case.
However, the upcoming court ruling on the SEC’s request for review could change everything. A Ripple gain means the SEC will be forced to release the very sensitive documents surrounding Hinman’s 2018 speech. XRP holders’ attorney John Deaton believes the SEC is more likely to reach a settlement than hand over such damning evidence.
It has been hinted that these files may contain SEC analysis on XRP, which concluded that the digital asset is not a security.