The U.S. Senate has taken a significant step in the ongoing battle 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 has created uncertainty about the future of the policy change.
With a vote count of 60-38, the Senate’s decision aligns with the stance previously taken by the House of Representatives. The policy, which requires companies to record customers’ cryptocurrencies on their balance sheets, has faced strong opposition, particularly from within the cryptocurrency industry. Despite bipartisan support for the resolution in Congress, the lack of a veto-proof majority leaves the final outcome uncertain.
An interesting aspect of this development is 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, celebrated the Senate’s decision as a victory for financial innovation and consumer protection.
The introduction of SAB 121 by the SEC in 2022 has drawn criticism 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 echoed 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, emphasized the urgency of reversing SAB 121 to foster America’s digital financial future, highlighting the bipartisan support for the resolution. However, the White House has expressed concerns that such actions could hinder the SEC’s ability to effectively address future issues related to crypto-assets.
The Senate’s decision is a pivotal 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 the evolving financial landscape.
While the fate of the resolution depends on President Biden’s decision, stakeholders in the cryptocurrency ecosystem eagerly await the outcome, as it could have significant implications for the industry’s trajectory and regulatory framework.
