Senate Votes Overwhelmingly to Revoke SEC’s SAB121, Awaits Biden’s Approval
In a significant development, the U.S. Senate has voted to officially disapprove the controversial staff accounting bulletin SAB121 issued by the Securities and Exchange Commission (SEC). The resolution will now be presented to President Joe Biden for his consideration.
The vote received strong bipartisan support, with Democratic Senators Chuck Schumer (NY), Cory Booker (NJ), and Kirsten Gillibrand (NY) voting in favor of overturning the stringent guidelines imposed on digital assets. The resolution was championed by Senator Cynthia Lummis (R-WY) and comes just over a week after the House voted on a companion bill introduced by Representatives Mike Flood (R-NE) and Wiley Nickel (D-NC).
Representative Flood criticized SAB121 earlier this month, stating that it sets a troubling precedent and is not an appropriate means to establish accounting guidance for digital asset custodians.
Despite the Senate’s endorsement, the resolution faces uncertain prospects as President Biden’s administration had expressed its intention to veto it in a letter issued on May 8. The letter argued that limiting the SEC’s ability to regulate crypto-assets would introduce financial instability and market uncertainty.
Lawmakers have been critical of SAB121, with crypto-friendly legislators disputing the SEC’s claim that it is designed to protect digital asset usage. Critics argue that the capital requirements imposed by SAB121 on financial institutions go too far, as banks are required to include clients’ custody assets as liabilities on their balance sheets. The Securities Industries and Financial Markets Association expressed concerns about limiting banks’ ability to offer these services, which would leave customers with fewer regulated options for safeguarding their digital asset portfolios and expose them to increased risk.
Lawmakers have also accused the SEC of disregarding procedural rules in the creation of SAB121. The Government Accountability Office found that the SEC did not report the rule change under the Congressional Review Act (CRA).
While President Biden may veto the resolution, the significant bipartisan support it received in Thursday’s vote may offer hope for the advancement of crypto legislation in general. The Digital Chamber Founder and CEO, Perianne Boring, highlighted the support from influential figures like Senator Schumer, stating that there is a genuine chance of getting the resolution across the finish line.