In a significant legislative move, the U.S. Senate passed a resolution to overturn a Securities and Exchange Commission (SEC) bulletin on crypto custody standards. The measure, which garnered a 60 to 38 majority vote on Thursday, now awaits President Joe Biden’s expected veto.
The Senate vote did not achieve the two-thirds majority needed to override a presidential veto, despite notable support from several Democrats, including Senate Majority Leader Chuck Schumer of New York. This legislative action echoes a similar initiative in the House of Representatives last week, where the measure passed with a 228-182 vote. The House vote saw predominant Republican support, supplemented by 21 Democratic votes, indicating bipartisan backing but falling short of the threshold to counter a veto.
The controversial SEC Staff Accounting Bulletin, known as SAB 121, was issued in 2022. It mandates that firms handling cryptocurrency must list customer holdings as liabilities, a requirement that has sparked significant debate and opposition within the crypto industry. Critics argue that this regulation could deter banks from safeguarding digital assets, potentially stifling innovation and growth in the sector.
“Revoking the SEC’s regulatory authority on crypto-assets would introduce substantial financial instability and market uncertainty,” the White House stated, emphasizing its intention to uphold the bulletin.
Cody Carbone, Vice President of Policy for the Chamber of Digital Commerce, criticized the anticipated veto, stating, “A veto would be nonsensical.” He urged President Biden to recognize the bipartisan support for the resolution as a consensus on prioritizing consumer protection over regulatory bias, rather than a direct criticism of his administration.
The Congressional Review Act (CRA) provides Congress with the authority to review and overturn federal agency rules. The Government Accountability Office identified SAB 121 as subject to this act last year, a determination that contradicts the SEC’s stance that it does not qualify as such.
Ron Hammond, Director of Government Relations at the Blockchain Association, commented on the anticipated presidential veto. “This isn’t shocking though, as a number of CRAs during Biden’s tenure have made it to his desk on a bipartisan basis and received a veto,” Hammond noted. He also highlighted the increasing engagement from grassroots and industry sectors in discussions on crypto regulations in Washington, D.C.
The resolution’s passage in both chambers of Congress underscores the growing legislative scrutiny of the SEC’s approach to cryptocurrency regulation. However, the expected presidential veto signifies the ongoing debate and division over the best path forward for the regulation of digital assets in the United States.
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