The U.S. Senate and House of Representatives have united to overturn the Securities and Exchange Commission’s (SEC) controversial crypto policy, known as Staff Accounting Bulletin No. 121 (SAB 121).
A bipartisan effort resulted in a 60-38 Senate vote to nullify the policy, despite President Joe Biden’s intention to veto the resolution due to concerns about investor protection and financial system stability.
Twelve Democrats joined with Republicans to support the resolution, surpassing the required majority for passage. However, the vote count fell short of being veto-proof. Notable Democrats like Senate Majority Leader Chuck Schumer (D-N.Y.) opposed the SEC’s crypto policy.
Senator Cynthia Lummis (R-Wyo.), a key advocate for the resolution, criticized SAB 121 for lacking consumer protection and referred to it as “a disaster.” She stated:
This is a win for financial innovation and a clear rejection of the approach taken by the Biden administration and Chair Gary Gensler towards crypto assets. This marks the first instance of both chambers of Congress passing standalone crypto legislation. President Biden should take note of the bipartisan support and sign this into law.
Introduced in 2022, SAB 121 required companies to include customers’ cryptocurrencies on their balance sheets, potentially impacting banks working with crypto clients. Republicans argued that the SEC exceeded its authority by implementing the policy without following proper rulemaking procedures, a position supported by the Government Accountability Office.
The SEC defended SAB 121 as non-binding guidance aimed at enhancing investor disclosure, pointing to instances of crypto firm failures and customers seeking assets in bankruptcy courts.
Lawmakers utilized the Congressional Review Act to challenge SAB 121, allowing Congress to overturn federal rules. Representative Mike Flood (R-Neb.), a key figure behind the resolution, commended the bipartisan support and urged President Biden to reconsider his veto threat.
Democratic opposition
Representative Wiley Nickel (D-N.C.), a co-sponsor of the House resolution, reiterated the call for the SEC to withdraw the bulletin, emphasizing Congress’s disapproval of the SEC’s circumvention of the rulemaking process and regulatory overreach.
This action marks Congress’s first involvement in a crypto-focused issue apart from a previous provision in an infrastructure law related to crypto taxation. The White House expressed concerns that overturning SAB 121 could limit the SEC’s ability to manage future crypto-related issues and ensure financial stability.
As the resolution moves to President Biden’s desk, the fate of SAB 121 and its implications for the crypto industry remain uncertain. Cryptocurrency regulation is not limited to U.S. authorities, with recent reports of Chinese authorities cracking down on illegal crypto services and arrests being made.
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