In a significant development for the cryptocurrency industry, the U.S. Senate has voted 60-38 to overturn the Securities and Exchange Commission’s (SEC) Staff Accounting Bulletin No. 121 (SAB 121). This controversial rule, which imposes regulatory burdens on digital asset custodians, has faced criticism for potentially hindering banks’ ability to safeguard digital assets.
The House of Representatives had previously passed the same resolution, H.J. Res. 109, aimed at eliminating regulatory obstacles that prevent highly regulated financial institutions from acting as custodians of digital assets. The Senate’s vote marks the first time Congress has passed standalone crypto legislation.
Despite bipartisan support, including votes from Senate Majority Leader Chuck Schumer and several other Democrats, the resolution faces a potential veto from President Joe Biden. The White House has indicated that the President would veto the resolution, citing concerns about limiting the SEC’s ability to maintain a comprehensive regulatory framework for crypto assets.
SAB 121 requires firms that custody crypto to record customer crypto holdings as liabilities on their balance sheets. Critics argue that this rule could deter banks from offering crypto custody services, thereby hindering the growth and adoption of digital assets. Senator Cynthia Lummis (R-WY), a vocal supporter of the resolution, called SAB 121 a “misguided rule” and praised the Senate’s vote as a “win for financial innovation.”
As the resolution awaits President Biden’s decision, the crypto industry remains on edge. A veto could prompt override attempts in Congress and potentially impact Biden’s re-election campaign.
