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US Senate votes to kill SEC crypto accounting policy, testing Biden veto threat
The US Senate joined the House of Representatives on Thursday in seeking to expunge the Securities and Exchange Commission’s (SEC) controversial crypto policy, known as Staff Accounting Bulletin No. 121, although the President Joe Biden promised to veto the resolution. The Senate voted 60-38 on the effort to overturn the policy, commonly referred to as SAB 121, although the crypto industry cannot breathe a sigh of relief over the initiative’s banking constraints, as Biden said that allowing the rule to be removed in this way would disrupt “the work to protect investors in crypto-asset markets and safeguard the financial system as a whole.”
A dozen Democrats voted alongside a majority of Republicans in favor of the resolution, far surpassing the simple majority of votes needed for its passage. However, the resolution did not receive enough votes to be veto-proof.
Even Senate Majority Leader Chuck Schumer (D-N.Y.) stood up to his party’s leader in opposing the SEC’s crypto efforts, along with other Democratic Party leaders.
Sen. Cynthia Lummis (R-Wyo.), who pushed for the resolution in the Senate, said the bulletin was “a disaster” that failed to protect consumers.
“This is a victory for financial innovation and a clear rebuke of how the Biden administration and President Gary Gensler have treated crypto assets and is the first time both chambers of the Congress pass standalone crypto legislation,” she said in a statement.
Published by the agency in 2022, SAB 121 found that a company holding a client’s cryptocurrencies would have to record them on its own balance sheet – which could have major capital implications for banks working with it. crypto customers. Republican lawmakers have criticized the SEC for instituting policy without going through the necessary regulatory process, and the The Government Accountability Office agreedfinding that the regulator erred in how it handled what should have been a rule rather than staff guidance.
“SAB 121 is a non-binding staff directive that, if followed, enhances important information for investors in companies that protect crypto assets for others,” an SEC spokesperson said in a statement after the vote. “Time and time again, we have seen crypto companies fail and seen their customers line up in bankruptcy court hoping to get what they thought was legally theirs.”
For years, Republican lawmakers have fought with federal financial agencies over the role of “guidance” documents, arguing that regulators are overextending their powers and regulated industries feel they can’t afford to ignore the guidelines, whether they are “non-binding”. or not.
Lawmakers in the House and Senate took on SAB 121 under the Congressional Review Act, which allows Congress to override federal rules. A number of Democrats — including 21 in the House — have joined the largely Republican effort, defying warnings from the White House.
Rep. Mike Flood (R-Neb.), one of the architects of the resolution, called the vote a “historic result,” noting bipartisan support.
“It is clear that there is overwhelming opposition to SAB 121, and I urge President Joe Biden to reconsider his previous statement of intent to veto the resolution. The President should sign my resolution to ensure that the SEC is reversing course and putting America on a path to growth for our digital financial future,” he said. Because they sought to kill this policy with the Congressional Review Act, a successful reversal would mean – by law – that the SEC would not be able to pursue similar policies in the future, which according to the statement the White House, “could also inappropriately constrain the activities of the SEC.” ability to ensure appropriate safeguards and address future issues related to cryptoassets, including financial stability.
Rep. Wiley Nickel (D-N.C.), who also co-sponsored the House resolution, said the House “should never have had to resort to” the Congressional Review Act and reiterated his call for the SEC to she removes the ballot before it is transmitted. Biden’s office.
“Today’s Senate vote to repeal SAB 121 sends a clear bipartisan message: Congress will not stand idly by while Gary Gensler and the SEC deliberately circumvent the statutory rulemaking process and overstep their authority regulation,” he said.
Besides a previous crypto tax provision making its way into an infrastructure bill despite industry resistance, this is the first time Congress has addressed an issue focused on the crypto industry, and it was sort of intended to help the industry. .
SEC spokespeople did not immediately respond to a request for comment.
UPDATE (May 16, 2024, 5:20 p.m. UTC): Adds legislator statements.
UPDATE (May 16, 2024, 6:21 p.m. UTC): Adds SEC comment.
UPDATE (May 16, 2024, 11:40 p.m. UTC): Corrects Rep. Flood’s name.