In a significant move that underscores the growing tensions surrounding cryptocurrency regulation, the U.S. Senate has voted 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 casts uncertainty over the fate of the policy change.
The Senate’s decision, with a vote count of 60-38, mirrors the stance taken earlier by the House of Representatives. The policy, which mandates companies to record customers’ cryptocurrencies on their balance sheets, has faced staunch 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 in limbo.
A notable aspect of this development is the divergence within the Democratic Party, with a dozen Democrats aligning with 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, hailed the Senate’s decision as a victory for financial innovation and consumer protection.
Senate Sends Strong Signal
SAB 121, introduced by the SEC in 2022, has drawn criticism for its potential adverse effects on banks and financial institutions involved in cryptocurrency transactions. Republican lawmakers have lambasted the SEC for implementing the policy without following proper rulemaking procedures, a sentiment echoed by the Government Accountability Office’s findings.
Efforts to nullify SAB 121 were pursued under the Congressional Review Act, enabling Congress to revoke federal regulations. Despite warnings from the White House, a significant number of Democrats joined Republicans in supporting the resolution, signaling widespread discontent with the SEC’s approach to crypto regulation.
Reflecting on the bipartisan backing for the resolution, Representative Kyle Flood, a Republican from Nebraska, emphasized the urgency of reversing SAB 121 to foster America’s digital financial future. However, the White House has expressed concerns that such actions could limit the SEC’s ability to address future issues related to crypto-assets effectively.
The Senate’s move marks a pivotal moment in congressional engagement with the cryptocurrency industry, following the inclusion of a crypto taxation provision in an infrastructure law. It underscores the growing scrutiny and calls for regulatory clarity in an evolving financial landscape.
While the resolution’s fate hangs in the balance pending President Biden’s decision, stakeholders across the cryptocurrency ecosystem await the outcome with bated breath, anticipating its implications for the industry’s trajectory and regulatory framework.
