The US House reverses SEC SAB 121 Crypto Rule regarding Custodian Liabilities
In a significant bipartisan move, the U.S. House of Representatives has approved a resolution challenging a controversial Securities and Exchange Commission (SEC) rule. This rule, which requires cryptocurrency custodians to list customer holdings as liabilities, has sparked intense debate within financial circles and the digital asset community.
Here’s what went down.
Bipartisan Backlash Against SEC Rule
The approval of this resolution highlights the growing divide between regulatory policies and the ever-evolving nature of digital assets. Both Republicans and a significant number of Democrats have united to question the SEC’s Staff Accounting Bulletin No. 121 (SAB 121), issued in 2022.
SAB 121 requires financial institutions that hold cryptocurrencies for clients to classify these holdings as liabilities, a move that many in the crypto industry see as overly burdensome.
The bipartisan opposition to this regulation resulted in a clear vote of 228-182 in favor of the resolution in the House.
Political Showdown
Chairman of the House Financial Services Committee, Patrick McHenry, criticized the SEC’s stance. He referred to SAB 121 as a prime example of regulatory overreach under Gary Gensler’s leadership, arguing that it encroaches on firms’ autonomy when safeguarding digital assets.
On the other side, Democrat Representative Maxine Waters defended the SEC’s position, emphasizing the importance of transparency and consumer protection in the crypto industry. Waters pointed to instances of collapses in crypto firms as justification for regulatory oversight.
Uncertain Future in Senate
Despite a rare bipartisan agreement, the resolution has moved to the Senate. However, the outcome remains uncertain.
The White House has indicated its opposition, with President Biden prepared to veto the resolution if it passes. Concerns persist regarding the potential consequences of revoking SAB 121, with fears of increased market volatility and financial instability.
There Is Still Hope…
In the midst of this political turmoil, Senator Cynthia Lummis has emerged as a ray of hope for the digital asset community. Lummis introduced a similar measure in the Senate, showcasing ongoing efforts to reshape crypto regulation in a more favorable manner.
Cody Carbone, Vice President of Policy at the Chamber of Digital Commerce, commended the House’s decision as a positive step. Nevertheless, he expressed disappointment at the prospect of a presidential veto, underscoring the industry’s concerns about the constraining impact of regulatory measures.
“Disappointed that President Biden issued a Statement of Administration Policy saying he would veto H.J. Res 109, the Joint Resolution to nullify the SEC’s Staff Accounting Bulletin (SAB) 121.”
Is this a win for crypto or a risky move? Share your thoughts.
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