Regulation
Senate Repeals SEC Crypto Rule; Biden’s veto is imminent
The United States Senate took an important step in vote to adopt HJ Res 109, a resolution to rescind the SEC’s controversial Staff Accounting Bulletin No. 121 (SAB 121).
The Senate’s 60-38 vote followed approval by the House of Representatives. This result reflects bipartisan support for the SEC’s crypto policy.
Bipartisan effort overturns SEC SAB 121
SAB 121, introduced in March 2022, requires financial institutions to list customers’ digital assets on their balance sheets. Critics say this mandate creates significant operational and financial burdens for companies managing cryptocurrencies. The policy has faced opposition because it potentially puts clients’ assets at risk in the event of bankruptcy.
Senator Cynthia Lummis, a staunch defender of cryptocurrency, was behind the adoption of the resolution. During the hearing, she highlighted the dangers of SAB 121, explaining that placing client assets on institutional balance sheets could put those assets at risk in the event of bankruptcy.
“SAB 121 puts consumers at risk by requiring a covered institution to place consumer assets on its balance sheet. This gives creditors a way to claim these assets in bankruptcy. We have seen how this impacts consumers. Their assets are frozen for months, even years, while the bankruptcy proceeds. In some cases, they lose their assets entirely. Now they have entrusted these assets to the custodian, it is the custodian who is bankrupt, and yet it is their assets which are at risk. So this doesn’t protect consumers at all,” said Senator Lummis.
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In her speech, Senator Lummis also advocated for self-hosted wallets for digital assets. This position aligns with his recent challenge to the The Department of Justice’s View on Noncustodial Crypto Services.
After the vote, Lummis expressed his satisfaction on social networks. She highlights the Senate’s decision as a victory for financial innovation and a rebuke of the current administration’s approach to crypto regulation.
“The Senate adopting a [Congressional Review Act] The CRA overturning SAB 121 is a victory for financial innovation and a clear rebuke of how the Biden administration and Gary Gensler have persecuted crypto. This is also the first time Congress has passed standalone crypto legislation. We are just getting started,” said Senator Lummis. wrote on X (formerly Twitter).
The crypto community celebrated the Senate’s decision. Michael Saylor, founder of MicroStrategy and well-known Bitcoin advocate, expressed his enthusiasm for X. He highlights the broad support for Bitcoin.
“Wall Street wants Bitcoin, the House of Representatives wants Bitcoin, and now the Senate wants Bitcoin,” he said. said.
Despite the resolution’s success in Congress, it did not gain enough votes to be veto-proof. President Joe Biden has pledged to veto the resolution. His administration argues that rescinding SAB 121 would weaken the SEC’s ability to protect investors and the financial system from crypto-related risks.
However, lawmakers like Rep. Mike Flood, who sponsored the resolution, continue to urge the president to reconsider.
“The President should sign my resolution to ensure that the SEC reverses course and puts America on a path to growth in our digital financial future,” said Rep. Flood. added.
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The Biden administration has recently stepped up its regulatory stance against the crypto industry. In response, industry leaders are mobilizing support for pro-crypto political candidates.
Coinbase has launched a new political action committee (PAC) named “Stay with crypto” to financially support crypto-friendly candidates. Personalities like Mark Cuban and Hayden Adams also warned that Biden’s current position could influence the upcoming election.
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