Regulation
Senate Repeals SEC Crypto Rule; Biden’s veto is imminent
The United States Senate has taken a significant step vote pass HJ Res 109, a resolution to overturn the controversial SEC Staff Accounting Bulletin No. 121 (SAB 121).
The Senate’s 60-38 vote follows approval by the House of Representatives. This result reflects bipartisan support against the SEC’s crypto policy.
Bipartisan effort reverses SEC SAB 121
SAB 121, introduced in March 2022, requires financial institutions to list customers’ digital assets on their balance sheets. Critics argue that this mandate creates significant operational and financial burdens for companies that handle cryptocurrencies. The policy has faced opposition for potentially exposing clients’ assets to risk in bankruptcy situations.
Senator Cynthia Lummis, an outspoken cryptocurrency advocate, led the resolution’s passage. During the hearing you highlighted the dangers of SAB 121, explaining that placing client assets on institutional balance sheets could jeopardize those assets in the event of bankruptcy.
“SAB 121 puts consumers at risk by requiring a covered institution to place consumers’ assets on its balance sheet. It gives creditors the ability to claim those assets in the event of bankruptcy. We have seen how this affects consumers. Their assets are frozen for months or even years while bankruptcy occurs. In some cases, they lose their assets completely. Now they have entrusted these assets to the custodian, it is the custodian who is bankrupt, yet their assets are the assets at risk. So, this doesn’t protect consumers at all,” Senator Lummis said.
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In her speech, Senator Lummis also supported self-hosted wallets for digital assets. This position is in line with her recent challenge to the Department of Justice Views on Noncustodial Crypto Services.
After the vote, Lummis expressed satisfaction on social media. She highlights the Senate’s decision as a victory for financial innovation and a rebuke to the current administration’s approach to regulating cryptocurrencies.
“The Senate approves a [Congressional Review Act] The CRA’s overturning of SAB 121 is a victory for financial innovation and a clear rebuke to the way the Biden administration and Gary Gensler have persecuted cryptocurrencies. It is also the first time Congress has passed standalone cryptocurrency legislation. We’re just getting started,” Senator Lummis he wrote on X (formerly Twitter).
The crypto community celebrated the Senate’s decision. Michael Saylor, founder of MicroStrategy and a well-known Bitcoin supporter, expressed his enthusiasm for X. He highlights the broad support for Bitcoin.
“Wall Street wants Bitcoin, the House of Representatives wants Bitcoin, and now the Senate wants Bitcoin,” he She said.
Despite the resolution’s success in Congress, it did not gain enough votes to be veto-proof. President Joe Biden did it he promised to veto the resolution. His administration argues that overturning SAB 121 would weaken the SEC’s ability to protect investors and the financial system from cryptocurrency-related risks.
However, lawmakers like Rep. Mike Flood, who sponsored the resolution, continue to urge the president to reconsider.
“The President should sign my resolution to ensure the SEC turns the tide and puts America on the path to growing our digital financial future,” said Rep. Flood. added.
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The Biden administration has recently stepped up its regulatory stance against the cryptocurrency industry. In response, industry leaders are mobilizing support for pro-cryptocurrency political candidates.
Coinbase has launched a new political action committee (PAC) called “Stay with cryptocurrencies” to financially support crypto-friendly candidates. Prominent figures such as Mark Cuban and Hayden Adams they also warned that Biden’s current position could influence the next election.
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