The US Senate Reverses SEC Crypto Policy to Protect Investors
The US Senate has taken a significant step by voting to pass a resolution overturning the SEC’s controversial Staff Accounting Bulletin No. 121 (SAB 121). This decision reflects bipartisan support against the SEC’s crypto policy, addressing concerns about the protection of investors in the cryptocurrency market.
Bipartisan Effort Reverses SEC’s SAB 121
- The introduction of SAB 121 in March 2022 mandated financial institutions to include customers’ digital assets on their balance sheets.
- Critics raised objections, citing operational and financial burdens for firms dealing with cryptocurrencies, along with the potential risks to customers’ assets in bankruptcy scenarios.
Senator Cynthia Lummis, an advocate for crypto, led the effort to pass the resolution, highlighting the dangers posed by SAB 121 during the Senate hearing. She emphasized the risks of including customers’ assets on institutional balance sheets, especially in the event of bankruptcy.
The Fight for Consumer Protection
- Senator Lummis warned that SAB 121 exposed consumers to risks by allowing covered institutions to claim customers’ assets in case of bankruptcy.
- She pointed out instances where consumers faced frozen assets or even complete loss due to bankruptcy proceedings involving custodians.
Senator Lummis also advocated for the use of self-hosted wallets for digital assets, aligning with her previous challenges to the Department of Justice’s stance on non-custodial crypto services.
Celebrating a Victory for Financial Innovation
- Following the Senate’s decision, Lummis celebrated the outcome on social media, positioning it as a win for financial innovation and a direct response to the current administration’s crypto regulation approach.
- Lummis emphasized that this marked a significant milestone as Congress passed standalone legislation specifically addressing crypto concerns.
The crypto community echoed the sentiment, with prominent figures like Michael Saylor expressing support for Bitcoin and celebrating the Senate’s move to protect investor interests in the crypto space.
President Biden’s Response and Future Outlook
- Despite the successful resolution in Congress, it fell short of the votes needed to override a potential presidential veto.
- President Biden has indicated his intention to veto the resolution, citing concerns about weakening the SEC’s ability to safeguard investors and the financial system from crypto-related risks.
However, lawmakers and sponsors of the resolution, like Representative Mike Flood, continue to push for the president to reconsider his stance and support the regulatory changes proposed in the resolution.
Industry Response and Political Advocacy
- The Biden administration’s recent regulatory actions against the crypto industry have prompted industry leaders to rally support for pro-crypto political candidates.
- Entities like Coinbase have launched political action committees to support crypto-friendly candidates, while influential figures warn of the potential electoral impact of current regulatory approaches.
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