U.S. companies that safeguard their clients’ crypto-assets received new accounting guidance Thursday in the form of a Securities and Exchange Commission, or SEC, Staff Accounting Bulletin. The guidance got a strong response from SEC commissioner Hester Peirce, a steadfast crypto advocate.

Staff Accounting Bulletin 121 noted the high technological, legal and regulatory risks associated with the custody of crypto-assets, relative to traditional assets. Those risks impact the operations and financial condition of companies such as Coinbase, PayPal and Robinhood, which safeguard users’ crypto-assets and allow the users to trade them on their platforms. For this reason, companies are advised to list their users’ assets on their books as liabilities as well as assets at their fair value at initial recognition.

In addition, the bulletin advised companies on disclosing the risks from crypto-assets and reminds them of existing rules on disclosure.

Commissioner Peirce released a response to the bulletin the same day. She wrote, “My concern is not with the accounting determination itself, which may be appropriate, but with the way the change is being made,” which she characterized as 

“Yet another manifestation of the Securities and Exchange Commission’s scattershot and inefficient approach to crypto.”

Peirce’s first objection to the bulletin was its timing, since the bulletin cites an October 2020 Report of the Attorney General, which in turn cites information from 2018. SEC staff has been reviewing statements provided by the companies in question the whole time since the 2020 report, Peirce noted.

Commissioner Peirce also pointed out that the bulletin “does not acknowledge the Commission’s own role in creating the legal and regulatory risks that justify this accounting treatment” by not providing regulatory and legal clarity. Recognizing its own role in the problem “would be appropriate,” Peirce said.

She noted that the guidance is narrowly targeted and highly specific, and it reads as though the guidance were enforceable. But, as a staff statement, the bulletin is not enforceable. “If we are trying to encourage companies to enter our public markets, we ought to embrace a more deliberate approach to changing rules—one that involves consulting with affected parties,” Peirce concluded.