Following approval in the House earlier this month, the US Senate has voted on and approved HJ Res. 109, which overturns the SEC’s Staff Accounting Bulletin (SAB) 121 under the Congressional Review Act (CRA).
When the House approved the resolution. Chairman of the House Financial Services Committee, Patrick McHenry, stated:
“Staff Accounting Bulletin 121 is one of the most glaring examples of the regulatory overreach that has defined Gary Gensler’s tenure at the SEC. SAB 121 requires financial institutions and firms that are safeguarding their customers’ digital assets to hold those assets on their balance sheet, making it cost-prohibitive to do so. Rep. Flood’s bipartisan, pro-consumer H.J.Res. 109 nullifies the SEC’s disastrous SAB 121 and brings commonsense into our digital asset policy. This resolution will allow consumers to hold their digital assets in one of the safest ways possible—through highly regulated banks and other financial institutions. I’m pleased to see it pass the House with support from both sides of the aisle and applaud the efforts of Congressmen Flood and Nickel in getting it across the finish line.”
By pursuing the CRA, supporters are seeking to protect consumers better.
Senator Cynthia Lummis, a long-time supporter of digital asset innovation, posted on X that the “Senate passing a CRA overturning SAB 121 is a win for financial innovation and a clear rebuke of the way the Biden admin and Gary Gensler have persecuted crypto. It also marks the 1st time Congress has passed standalone crypto legislation.”
She added that they are just getting started.
While Senator Lummis spoke in support of the resolution prior to the vote, long-time digital asset critic Senator Elizabeth Warren took the opposite side of the CRA, slamming the move to enable financial firms to custody crypto.
The final vote of 60 for and 38 against (two not voting) saw support from many Democrats. While all Republicans voted yes, 11 Democrats and one independent voted to support the resolution.
When the SEC formulated SAB 121 in 2022, Commissioner Hester Peirce slammed the bulletin as “yet another manifestation of the Securities and Exchange Commission’s scattershot and inefficient approach to crypto.”
The SEC, under Chairman Gary Gensler’s leadership, has long been critical of digital asset innovation.
While the resolution has passed both the House and the Senate, President Joe Biden is expected to veto it. On May 8th, the Biden Administration issued a statement indicating they are strongly opposed to the passage of the resolution.
The policy statement declared:
“SAB 121 was issued in response to demonstrated technological, legal, and regulatory risks that have caused substantial losses to consumers. By virtue of invoking the Congressional Review Act, it could also inappropriately constrain the SEC’s ability to ensure appropriate guardrails and address future issues related to crypto-assets, including financial stability. Limiting the SEC’s ability to maintain a comprehensive and effective financial regulatory framework for crypto-assets would introduce substantial financial instability and market uncertainty.”
And:
“If the President were presented with H.J. Res. 109, he would veto it.”
A two-thirds majority in both the House and the Senate is required to overturn a Presidential veto.
HEY WARREN—your “anti-#crypto army” lost big today. pic.twitter.com/MBMFXP8zYc
— Caitlin Long 🔑⚡️🟠 (@CaitlinLong_) May 16, 2024
#BREAKING: The Senate just passed @USRepMikeFlood‘s bipartisan CRA resolution to nullify the @SECGov‘s disastrous SAB 121.
🚂 Next stop, the White House.@POTUS: sign this commonsense measure to foster innovation and protect consumers in the digital asset ecosystem. pic.twitter.com/BiK0NeBQnU
— Financial Services GOP (@FinancialCmte) May 16, 2024