US Senate Takes a Stand Against SEC's Controversial Crypto Policy

By: Eva Baxter

The US Senate has demonstrated a bipartisan vote in favor of repealing the SEC’s Staff Bulletin 121 (SAB 121). As many as 60 Senators supported the resolution to overturn this financial guideline, 11 of whom were Democrats, 48 were Republicans, and one was an independent representative. This move paints a united front against the SEC's policy which many considered as regulatory overreach.

Notwithstanding the Senate's and the House of Representative's majority vote in favor of the resolution, President Joe Biden has signaled the likelihood of a veto. The administration expressed concern that overturning SAB 121 could potentially disrupt the SEC's efforts to safeguard investors and ensure the financial system's stability. Overturning the resolution would necessitate a two-thirds majority vote from both the Senate and the House, a margin that the recent Senate vote fell short of.

SAB 121 has been mired in controversy, as it mandates banks and financial firms to maintain customer assets on their balance sheets. This policy has been decried by many, including the American Bankers Association (ABA), who claim it disincentivizes banks from acting as spot Bitcoin ETF custodians due to excessive cost. The association has requested modifications rather than a complete repeal of the policy.

Lawmakers have also criticized the SEC for bypassing the rulemaking process and public commentary in its implementation of SAB 121. Stay tuned as the saga continues to unfold.