Senate approves reversal of SEC crypto custody bulletin

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As an analyst with extensive experience in financial regulatory affairs, I strongly believe that the Senate’s decision to pass a measure overturning the SEC’s SAB 121 bulletin is a significant step towards fostering innovation and protecting consumers in the digital asset ecosystem. While it is expected that President Biden will veto this resolution, the bipartisan support it has garnered is an encouraging sign of a growing consensus on the need for balanced crypto regulations.

The U.S. Senate has voted to repeal a Securities and Exchange Commission (SEC) bulletin concerning crypto custody regulations. However, this action is anticipated to be vetoed by President Joe Biden.

On Thursday, the Senate’s decision resulted in a victory for the ayes with a margin of 60 votes to 38. However, this number fell short of the necessary two-thirds (67 votes) to overrule a potential veto. Notably, among those who voted in favor of the resolution were Senate Majority Leader Chuck Schumer of New York and several other Democratic senators.

As an analyst, I’ve noticed that recent legislative action bears a striking resemblance to the bill passed in the House last week. The vote tally was 228-182 in favor of the measure. Although mainly backed by Republicans, there were 21 Democrats who supported it as well. This suggests a degree of bipartisan approval, but unfortunately, the Democratic support fell short of what would be needed to override a potential veto.

The SEC Staff Accounting Bulletin (SAB 121), which became effective in 2022, has sparked controversy within the crypto industry. Under this rule, firms dealing with cryptocurrencies must report customer holdings as liabilities on their balance sheets, a provision that has provoked disagreement and resistance. Detractors caution that such regulations might discourage banks from securing digital assets due to the added complexity and potential risks involved.

#BREAKING: The Senate has approved Republican Representative Mike Flood’s bipartisan CRA resolution aimed at annulling the Securities and Exchange Commission (SEC)’s problematic SAB 121.Next on the agenda: a trip to the White House.@POTUS: kindly sign this reasonable legislation to stimulate innovation and safeguard consumers in the digital asset sector.— Financial Services GOP (@FinancialCmte) May 16, 2024

The White House expressed its opposition to removing the Securities and Exchange Commission’s (SEC) oversight of crypto-assets, warning that such a move could lead to significant financial instability and market volatility.

Cody Carbone, the Vice President of Policy at the Chamber of Digital Commerce, expressed his disapproval towards the possible veto.

“Carbone expressed that a veto would be illogical. He encouraged the President to consider the resolution’s bipartisan backing not as a rebuke, but rather as a reflection of widespread agreement on placing consumer protection above regulatory prejudice.”

As a crypto investor, I’m keeping an eye on recent developments regarding Securities and Exchange Commission (SEC) rules, specifically the one outlined in SAB 121. Now, under the Congressional Review Act (CRA), Congress has the power to review and overturn certain agency rules. The Government Accountability Office (GAO) identified SAB 121 as a rule that could potentially be subjected to this act, which contradicts the SEC’s previous stance that it doesn’t fall under CRA jurisdiction. This situation adds an extra layer of uncertainty to the regulatory landscape for crypto investments.

Ron Hammond, the Government Relations Director at the Blockchain Association, expressed his views on the potential outcomes of the resolution, implying that a presidential veto was expected.

As a crypto investor, I’ve noticed that despite the partisan nature of some Consumer Financial Protection Agency (CFRA) nominations during President Biden’s term, it hasn’t come as a surprise when these nominees have reached his desk and been met with a veto. This trend has held true due to the bipartisan support these nominations have enjoyed.

Hammond emphasized the increasing involvement of both grassroots groups and the industry in the cryptocurrency regulatory conversations taking place in Washington, D.C.

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2024-05-16 21:30