The U.S. Senate voted on Thursday to formally disapprove the Securities and Exchange Commission’s (SEC) controversial staff accounting bulletin SAB121, which will now go to President Joe Biden’s desk.
Will Joe Biden Approve SAB121 Resolution After Senate Vote?
Thursday’s vote garnered considerable bipartisan support, with Democratic Senators Chuck Schumer (NY), Cory Booker (NJ), and Kirsten Gillibrand (NY) voting in favor of the effective “reversal” of the stringent digital asset guidelines.
The Senate passing a CRA overturning SAB 121 is a win for financial innovation and a clear rebuke of the way the Biden admin and Gary Gensler have persecuted crypto.
It also marks the 1st time Congress has passed standalone crypto legislation.
We are just getting started.
— Senator Cynthia Lummis (@SenLummis) May 16, 2024
Championed by Senator Cynthia Lummis (R-WY), the vote comes just a little over a week after the House voted on a companion bill brought forth by Representatives Mike Flood (R-NE) and Wiley Nickel (D-NC).
“SAB 121 sets a disturbing precedent and is not the appropriate vehicle to promulgate accounting guidance for digital asset custodians,” Flood said in testimony earlier this month.
The resolution is now headed to President Joe Biden’s desk, though the legislation’s success seems grim following a May 8 letter from the White House saying Biden would veto it.
“Limiting the SEC’s ability to maintain a comprehensive and effective financial regulatory framework for crypto-assets would introduce substantial financial instability and market uncertainty,” the letter read.
The SEC In Hot Water With Lawmakers Over SAB121
The SEC claims SAB121 is meant to safeguard digital asset use, though crypto-friendly lawmakers have pushed back against the federal agency’s rhetoric.
Critics argue that capital requirements on financial institutions brought forward by SAB121 go too far, with banks required to list clients’ custody assets with liabilities on their balance sheets.
“Limiting banks’ ability to offer these services leaves customers with few well-regulated, trusted options for safeguarding their digital asset portfolios and ultimately exposes them to increased risk,” the Securities Industries and Financial Markets Association said in a May 14 letter.
Lawmakers have further condemned the commission’s failure to follow procedural rules in SAB121’s creation as the Government Accountability Office (GAO) recently found that the SEC did not report the rule change under the Congressional Review Act (CRA).
The second most powerful democrat in the country Sen. Schumer voted in support of nullifying SAB 121 today. If anyone can convince POTUS to sign, it’s Schumer. We have a very real chance of getting this across the finish line. https://t.co/z0S9ttwaZc
— Perianne (@PerianneDC) May 16, 2024
“It is unfortunate that the SEC would attempt to circumvent the rulemaking process while falsely claiming that SAB 121 is simply non-binding staff-level guidance,” Flood continued.
While Biden may veto the resolution to nullify SAB121, Thursday’s strong show of bipartisan support for the resolution may prove hopeful for advancing crypto legislation in general.
“The second most powerful democrat in the country Sen. Schumer voted in support of nullifying SAB 121 today,” said The Digital Chamber Founder and CEO Perianne Boring. “If anyone can convince POTUS to sign, it’s Schumer. We have a very real chance of getting this across the finish line.”