Senate Overwhelmingly Votes to Revoke SEC’s SAB121 in a Landmark Decision
In a significant turn of events, the United States Senate has officially disapproved the Securities and Exchange Commission’s (SEC) controversial staff accounting bulletin SAB121. This decision marks a crucial step as the resolution now heads to President Joe Biden’s desk.
The vote received overwhelming bipartisan support, with Democratic Senators Chuck Schumer (NY), Cory Booker (NJ), and Kirsten Gillibrand (NY) favoring the “reversal” of the strict digital asset guidelines. Senator Cynthia Lummis (R-WY) championed the vote, which took place just over a week after the House voted on a companion bill presented by Representatives Mike Flood (R-NE) and Wiley Nickel (D-NC).
In his testimony earlier this month, Flood expressed concerns about SAB121, stating that it sets a concerning precedent and is not the appropriate means to establish accounting guidance for digital asset custodians.
Despite its success in the Senate, the resolution’s future remains uncertain due to a letter from the White House on May 8, indicating that President Biden would veto it. The letter argues that limiting the SEC’s authority to regulate crypto-assets would introduce financial instability and market uncertainty.
Lawmakers have been critical of SAB121, with some questioning the SEC’s intentions and others arguing that the capital requirements imposed on financial institutions go too far. Critics claim that these requirements force banks to include clients’ custody assets and liabilities on their balance sheets. This limitation on banks’ ability to provide such services leaves customers with limited options for safeguarding their digital asset portfolios, thereby increasing their exposure to risk.
The Securities Industries and Financial Markets Association expressed their concerns in a letter, stating that restricting banks’ offerings in this area would leave customers with few well-regulated and trusted options for protecting their digital assets.
Lawmakers have also criticized the SEC for failing to follow procedural rules during the creation of SAB121. The Government Accountability Office recently discovered that the SEC did not report the rule change under the Congressional Review Act (CRA).
Despite the potential veto from President Biden, the strong bipartisan support for the resolution indicates a hopeful outlook for advancing crypto legislation in general. The support and vote of influential figures like Senator Schumer are seen as positive indicators for the resolution’s chances of success.
“The second most powerful democrat in the country Sen. Schumer voted in support of nullifying SAB 121 today,” said The Digital Chamber Founder and CEO Perianne Boring. “If anyone can convince POTUS to sign, it’s Schumer. We have a very real chance of getting this across the finish line.”
