Regulation
Crypto Regulation Reversal: House Takes Action Against SEC SAB 121
In line with the latest developments, the United States House of Representatives passed an important bipartisan decision, deciding to overturn a Securities and Exchange Commission rule that requires cryptocurrency custodians to record customer holdings as liabilities.
This legislative milestone highlights the growing discord between regulatory frameworks and the changing digital asset landscape.
Bipartisan support calls SEC position into question
Republicans and a notable number of Democrats showed strong support for the SEC’s Staff Accounting Bulletin No. 121 (SAB 121) resolution, originally issued in 2022.
The SEC’s Staff Accounting Bulletin (SAB 121) requires each financial institution that holds cryptocurrencies on behalf of customers to treat those crypto holdings as a liability. Many argue that this regulation constitutes an excessive financial burden on these cryptocurrency holding institutions.
However, a rare bipartisan agreement was reached on this regulation of cryptocurrencies, with the House passing the measure by a vote of 228 to 182.
Republican Patrick McHenry, chairman of the House Financial Services Committee, criticized the SEC’s approach.
“Staff Accounting Bulletin, or SAB, 121 is one of the most egregious examples of the regulatory overreach that defined Gary Gensler’s tenure at the SEC. Through SAB 121, the Commission is attempting to dictate how financial institutions and businesses protect Americans’ digital assets under the guise of so-called staff directives,” he said in that statement to the House.
However, Democratic Rep. Maxine Waters defended the SEC’s regulations. His position was that the SAB 121 regulation focuses on maintaining transparency within these crypto institutions and acts to protect consumers from fraud, examples of which include the identification of several large-scale crypto business collapses. wingspan.
Response from the White House and Senate
With a rare bipartisan agreement, the resolution advanced in the Senate. However, the future of the resolution remains undetermined.
The White House has already expressed its opposition. If the resolution passes the Senate, President Biden is poised to use his veto against the resolution. The administration is concerned that if SAB 121 is repealed, it could lead to greater financial instability and uncertainty in the already volatile U.S. market.
On the positive side, Senator Cynthia Lummis, a strong supporter of the digital assets sector, introduced a companion measure in the Senate. This speaks to ongoing legislative efforts to reshape how digital assets are managed and regulated.
Chamber of Digital Commerce Vice President for Policy Cody Carbone represented the voices of the digital commerce industry in the Chamber, saying the resolutions against SAB 121 are optimistic.
However, Carbone expressed disappointment with the possible presidential veto, saying: “Disappointed that President Biden issued a statement of administrative policy saying he would veto HJ Res 109, the joint resolution to overturn the SEC Staff Accounting Bulletin (SAB) 121. »
The U.S. House of Representatives’ decision to ignore the SEC’s Cryptocurrency Custody Rule is a game-changer in the broader debate over digital asset regulation and innovation. If submitted to the Senate, such a resolution will have a considerable effect on the operating environment of financial institutions dealing with cryptocurrencies and on the market as a whole in terms of stability.