US companies that protect customers’ cryptocurrencies received new accounting guidance on Thursday in the form of an Employee Accountability Bulletin issued by the Securities and Exchange Commission. The directive received a strong response from Securities and Exchange Commission Commissioner Hester Pierce, a strong supporter of cryptocurrency.

Personal Accountability Bulletin 121 notes the higher technological, legal and regulatory risks associated with owning cryptocurrencies compared to traditional assets. These risks affect the operations and financial health of companies such as Coinbase, PayPal and Robinhood, which protect users’ cryptocurrencies and allow users to trade them on their platforms. For this reason, companies are encouraged to list users’ assets in their books as debt, as well as assets at fair value on initial recognition.

In addition, the bulletin advised companies to disclose the risks associated with cryptocurrencies and reminded them of current disclosure rules.

On the same day, Commissioner Pierce posted a response to the bulletin. I wrote: “It is not the definition of accounting that interests me, but how the changes are made,” as I described as follows:

“Another manifestation of the SEC’s fragmented and ineffective approach to cryptocurrency.”
Pierce’s first objection to the ballot was the timing, when he quotes the October 2020 report, which in turn quotes 2018 information.

Commissioner Pierce also noted that the prospectus “does not recognize the role of the Commission in creating the legal and regulatory risks that justify such liability” because it lacks legal and regulatory clarity. According to Pierce, acknowledging the individual’s role in the problem would “be appropriate”.

She noted that the guide is very narrow and specific and can be read as if it were actionable. But as a statement to the working group, the ballot paper is not enforceable. “If we are trying to encourage companies to enter our public markets, we need to take a more balanced approach to changing the rules that include stakeholder consultation,” Pearce concluded.

Source: CoinTelegraph

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