Regulation
House resolution to overturn controversial SEC rule likely to pass Senate: sources
A House proposal to revoke Securities and Exchange Commission Staff Accounting Bulletin 121 is likely to pass through the Senate in a vote on Thursday, several people familiar with the situation told CoinDesk.
A Senate source familiar with the situation told CoinDesk that they expected a floor vote late Thursday morning and that the bill was in a “good position” for passage.
“There will probably be more than one Democrat who will vote for it,” the individual said.
In a statement, Sen. Kirsten Gillibrand (DN.Y.) said she would support the resolution to overturn the bulletin, adding that it “presents important procedural and policy issues.”
“The rule was issued without adequate consultation with the respective regulatory agencies or Congress and without an adequate notice and comment period,” he said. “More importantly, it forces an accounting approach that deviates from established standards, forcing financial institutions to treat their customers’ digital assets as their own. This will limit options for consumers and leave them with less, if not more, protection of consumers in case of bankruptcy.”
SAB 121 aimed to explain how companies should account for cryptocurrencies, stating that they should keep them on their balance sheets. Critics argue that the bulletin dissuades major custodians and other companies from holding cryptocurrencies for customers. Last week, the House of Representatives voted to advance the House resolution that rejected the guidance.
If signed by U.S. President Joe Biden, the House resolution would disapprove the bulletin and prevent the SEC from issuing similar guidance in the future. The White House threatened to veto the resolution if it advances to the Senate, saying it “reflects the considered views of the SEC staff.”
“It may also inappropriately limit the SEC’s ability to ensure adequate guardrails and address future issues related to crypto-assets, including financial stability,” the veto note reads.
Despite the veto threat, 21 House Democrats and an overwhelming majority of House Republicans voted in favor of the resolution.
In a statement, the resolution’s sponsor, Rep. Mike Flood (R-Neb.), said, “We’re hoping it passes the Senate this week, and I think it’s getting the SEC’s attention that we’re serious.”
The resolution’s other sponsor, Rep. Wiley Nickel (D-N.C.), wrote. a letter to SEC Chairman Gary Gensler on Wednesday, who said the lawmaker had asked for time to discuss the bulletin with Gensler’s office but had received no response.
“I strongly encourage you to withdraw SAB121 to protect investors and the financial system, strengthen American competitiveness, and respect Congress’s role in administrative rulemaking,” the letter reads. “Acting now to withdraw SAB121, before it passes the Senate, to allow custody of digital assets would be a positive step towards a balanced regulatory approach towards cryptocurrencies.”
Ron Hammond, director of government relations with the Blockchain Association, said in a statement that the group expects bipartisan support for the resolution.
“However, the threat of a presidential veto remains,” Hammond said. “We encourage reconsideration of the veto, allowing for the repeal of this harmful anti-cryptocurrency provision.”
UPDATE (May 15, 2024, 7:30 PM UTC): Adds Senator Gillibrand’s statement and Representative Nickel’s letter.