The U.S. Senate has approved a measure aimed at reversing an SEC bulletin concerning crypto custody standards. This measure now awaits President Joe Biden’s anticipated veto.
Thursday’s Senate vote concluded with a 60 to 38 majority, falling short of the two-thirds majority required to override a veto. Notably, several Democrats, including Senate Majority Leader Chuck Schumer of New York, supported the resolution.
This legislative action mirrors a similar move made in the House last week, where the measure passed with a 228-182 vote. Although primarily supported by Republicans, 21 Democrats also voted in favor, showcasing bipartisan support albeit insufficient to counter a potential veto.
The disputed SEC Staff Accounting Bulletin, also referred to as SAB 121, was initially released in 2022. It mandates that companies managing cryptocurrencies must categorize customer holdings as liabilities, a stipulation that has sparked controversy and resistance within the cryptocurrency sector. Opponents contend that such regulations might discourage banks from providing custodial services for digital assets.
The White House emphasized that “Repealing the SEC’s regulatory oversight on crypto-assets would create significant financial instability and market uncertainty,” asserting its commitment to uphold the bulletin.
Cody Carbone, Vice President of Policy at the Chamber of Digital Commerce, voiced disapproval of the possible veto.
“A veto would be highly illogical,” Carbone remarked, urging the President to recognize the resolution’s bipartisan support not as a critique but as a consensus in favor of prioritizing consumer protection over regulatory biases.
Under the Congressional Review Act (CRA), which grants Congress the authority to review and reverse agency regulations, the SEC’s bulletin could potentially be nullified. Last year, the Government Accountability Office identified SAB 121 as a rule subject to this act, contrary to the SEC’s position that it does not fall under this category.
Ron Hammond, Director of Government Relations at the Blockchain Association, discussed the prospects of the resolution, noting that a presidential veto was expected.
“This isn’t surprising, given that several CRAs have reached Biden’s desk on a bipartisan basis during his tenure and have been met with vetoes,” Hammond remarked.
Hammond also highlighted the increasing involvement of grassroots movements and industry sectors in the ongoing discussions about crypto regulations in Washington, D.C.
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