Regulation
Senate Approves Resolution Overturning SEC Cryptocurrency Rule
The U.S. Senate has passed a resolution overturning U.S. Securities and Exchange Commission (SEC) Staff Accounting Bulletin (SAB) 121.
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SAB 121 provides guidance for entities regarding the accounting treatment of cryptocurrency safeguard obligations.
Last November, a bipartisan group of members of Congress, including U.S. Senators Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-NY), along with U.S. Representatives Wiley Nickel (D-NC), Mike Flood (R- NE), Patrick McHenry (R-NC), French Hill (R-AR), and Ritchie Torres (D-NY), urged financial regulators to clarify that SAB 121 is not enforceable after the Government Accountability Office (GAO).
It was then determined that the rule should be addressed by a Congressional Review Act (CRA) resolution. On February 1, Lummis, Nickel, and Flood introduced a bipartisan, bicameral Congressional Review Act resolution to overturn Staff Accounting Bulletin 121 of the U.S. Securities and Exchange Commission. The resolution passed the Senate by a vote of 60 – 38. It had previously been passed in the House.
“SAB 121 was a disaster from the start. The SEC should never establish policy – especially toward banks, an industry it does not regulate – through a staff accounting bulletin. This is nothing more than this administration’s attempt to circumvent the law while eliminating critical consumer protections,” Lummis said. “This is a victory for financial innovation and a clear rebuke to the way the Biden administration and President Gary Gensler have treated crypto assets and marks the first time both houses of Congress have passed standalone cryptocurrency legislation President Biden must take note of the bipartisan support this CRA has received in both the House and Senate and sign it into law.”
SIFMA, an organization representing financial intermediaries and asset managers, praised the passage of the resolution.
“The significant bipartisan vote in both houses of Congress shows a stark contrast between Congress and the SEC. SAB 121 would fundamentally change how financial institutions are expected to account for the custody of digital assets, and the SEC issued the SAB without stakeholder involvement or consultation with prudential regulators. This CRA would benefit investors, financial markets, and the general public by restoring the ability of well-regulated financial institutions to provide digital asset custody services. We urge President Biden to promptly sign this resolution into law,” SIFMA President and CEO Kenneth E. Bentsen, Jr. said.