The U.S. Senate has taken a significant step in the ongoing debate over cryptocurrency regulation by voting to overturn the Securities and Exchange Commission’s (SEC) controversial crypto policy, known as Staff Accounting Bulletin No. 121 (SAB 121). However, President Joe Biden’s threat to veto the resolution introduces uncertainty regarding the policy change’s ultimate fate.
The Senate’s decision, which passed with a vote count of 60-38, aligns with the stance previously taken by the House of Representatives. SAB 121 requires companies to include customers’ cryptocurrencies on their balance sheets, a provision that has faced strong opposition from various quarters, particularly within the cryptocurrency industry. Despite bipartisan support for the resolution in Congress, the lack of a veto-proof majority leaves the final outcome uncertain.
Notably, the development highlights the division within the Democratic Party, with a dozen Democrats joining Republicans in favor of overturning SAB 121. Even Senate Majority Leader Chuck Schumer broke ranks with party leadership to oppose the SEC’s crypto policy. Senator Cynthia Lummis, a Republican from Wyoming and a vocal advocate for crypto-friendly regulations, praised the Senate’s decision as a victory for financial innovation and consumer protection.
The Senate’s move sends a strong signal regarding SAB 121, which was introduced by the SEC in 2022 and has been criticized for its potential negative impact on banks and financial institutions involved in cryptocurrency transactions. Republican lawmakers have criticized the SEC for implementing the policy without following proper rulemaking procedures, a sentiment supported by the Government Accountability Office’s findings.
Efforts to nullify SAB 121 were pursued under the Congressional Review Act, which allows Congress to revoke federal regulations. Despite warnings from the White House, a significant number of Democrats joined Republicans in supporting the resolution, indicating widespread dissatisfaction with the SEC’s approach to crypto regulation.
Representative Kyle Flood, a Republican from Nebraska, stressed the urgency of reversing SAB 121 to support America’s digital financial future, reflecting on the bipartisan support for the resolution. However, the White House has expressed concerns that such actions could limit the SEC’s ability to effectively address future issues related to crypto-assets.
The Senate’s decision marks a crucial moment in congressional engagement with the cryptocurrency industry, following the inclusion of a crypto taxation provision in an infrastructure law. It highlights the increasing scrutiny and demand for regulatory clarity in a rapidly evolving financial landscape.
While the resolution’s fate remains uncertain pending President Biden’s decision, stakeholders across the cryptocurrency ecosystem anxiously await the outcome and its potential implications for the industry’s trajectory and regulatory framework.
