The U.S. Senate has made a significant decision that highlights the escalating tensions surrounding cryptocurrency regulation by voting to overturn the Securities and Exchange Commission’s (SEC) controversial crypto policy, Staff Accounting Bulletin No. 121 (SAB 121). However, President Joe Biden’s threat to veto the resolution has brought uncertainty about the fate of the policy change.
With a vote count of 60-38, the Senate’s decision aligns with the House of Representatives’ stance on the matter. SAB 121, which requires companies to include customers’ cryptocurrencies on their balance sheets, has faced strong opposition, especially from the cryptocurrency industry. Despite bipartisan support in Congress, the lack of a veto-proof majority leaves the final outcome uncertain.
A noteworthy aspect of this development is the split within the Democratic Party, as a dozen Democrats joined Republicans in favor of overturning SAB 121. Even Senate Majority Leader Chuck Schumer went against party leadership to oppose the SEC’s crypto policy. Senator Cynthia Lummis, a Republican from Wyoming and a prominent advocate for crypto-friendly regulations, praised the Senate’s decision as a triumph for financial innovation and consumer protection.
The introduction of SAB 121 by the SEC in 2022 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 view supported by the Government Accountability Office’s findings.
Efforts to nullify SAB 121 were carried out under the Congressional Review Act, allowing 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 importance of reversing SAB 121 to support America’s digital financial future, given the bipartisan support for the resolution. However, the White House has raised 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 involvement with the cryptocurrency industry, following the inclusion of a crypto taxation provision in an infrastructure law. It highlights the increasing scrutiny and demands for regulatory clarity in a changing financial landscape.
As stakeholders in the cryptocurrency ecosystem eagerly await President Biden’s decision, the outcome of the resolution holds significant implications for the industry’s direction and regulatory framework.