- US Senate votes to overturn SEC’s SAB 121, faces Biden’s veto threat.
- Successful reversal restricts SEC’s future crypto-asset policy actions.
U.S. Senate voted 60-38 on Thursday to overturn the controversial SEC policy, Staff Accounting Bulletin No. 121 (SAB 121), following the House’s lead. Despite this legislative push, President Joe Biden has pledged to veto the resolution, arguing it would undermine investor protections and financial stability.
A bipartisan coalition, including a dozen Democrats, supported the resolution, which exceeded the simple majority needed but fell short of a veto-proof margin. Senate Majority Leader Chuck Schumer (D-N.Y.) and other Democratic leaders opposed the SEC‘s stance, aligning with Republicans.
Sen. Cynthia Lummis (R-Wyo.), who spearheaded the Senate resolution, criticized SAB 121 as detrimental to consumers and financial innovation. “This is a win for financial innovation and a clear rebuke of the way the Biden administration and Chair Gary Gensler have treated crypto assets,” she stated.
More Details On SAB 121
Implemented in 2022, SAB 121 requires companies holding cryptocurrencies for clients to list them on their balance sheets. It impacts banks’ capital requirements. Republican lawmakers condemned the SEC for bypassing the formal rulemaking process, a stance supported by the Government Accountability Office.
“SAB 121 is non-binding staff guidance that, if followed, enhances important disclosure to investors,” an SEC spokesperson stated post-vote. It highlights past failures of crypto firms to protect customers.
The Congressional Review Act allowed lawmakers to challenge SAB 121. Rep. Mike Flood (R-Neb.) hailed the vote as a “landmark result” and urged President Biden to reconsider his veto threat.
“The President should sign my resolution to ensure the SEC reverses course and sets America on a path to growing our digital financial future,” Flood asserted. If successful, the reversal would prevent the SEC from enacting similar policies, potentially restricting future regulatory measures on crypto-assets.
Rep. Wiley Nickel (D-N.C.) echoed this sentiment, criticizing the SEC’s process and urging the withdrawal of the bulletin.
Aside from prior tax-related provisions in an infrastructure law, this legislative move marks Congress’s first direct action to support the crypto industry.
The SEC has yet to comment on the resolution.
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