WASHINGTON, DC, Monday, May 13, 2024- On Wednesday, May 8, the House of Representatives voted to repeal a contentious Securities and Exchange Commission (SEC) bulletin that imposed restrictions on firms providing cryptocurrency custodial services.
The resolution passed with a vote of 228-182, garnering support primarily from Republicans, with only 21 Democrats backing the measure to nullify the SEC’s Staff Accounting Bulletin 121 (SAB 121).1
This could set up a potential clash with the White House according to reports. 2
The resolution, H.J. Res. 109, targets the SEC’s Staff Accounting Bulletin No. 121 (SAB 121), which critics say discourages banks from offering crypto custody services by requiring them to hold those assets on their balance sheets.
Supporters, including Rep. Mike Flood (R-Neb.), argue the rule creates unnecessary burdens for banks and hinders innovation in the crypto industry. They accuse SEC Chair Gary Gensler of exceeding his authority and failing to consult with other regulators before implementing the policy.
The Biden administration, however, opposes the resolution. A White House statement said the rule is “necessary to protect consumers in the volatile crypto market.” 3
Rep. Patrick McHenry (R-N.C.) echoed concerns about the rule’s impact on traditional banking practices, while Rep. Maxine Waters (D-Calif.) expressed worries that overturning it could limit the SEC’s ability to oversee the crypto sector.
The resolution now heads to the Senate, where a similar measure has been introduced by Sen. Cynthia Lummis (R-Wyo.). If approved by both chambers, it would go to President Biden for his signature or veto.
The Executive Office of the President released a statement on Tuesday (Ahead of the vote) expressing strong opposition to H.J. Res. 109, a congressional resolution aiming to invalidate “Staff Accounting Bulletin No. 121” issued by the Securities and Exchange Commission (SEC).
The Administration contends that the resolution, introduced by Rep. Flood (R-NE) and four cosponsors, would disrupt the SEC’s efforts to protect investors in crypto-asset markets and ensure the stability of the broader financial system.
“The Administration strongly opposes passage of H.J. Res. 109, which would disrupt the Securities and Exchange Commission’s (SEC) work to protect investors in crypto-asset markets and to safeguard the broader financial system. H.J. Res. 109 would invalidate SEC Staff Accounting Bulletin 121 (SAB 121), which reflects considered SEC staff views regarding the accounting obligations of certain firms that safeguard crypto-assets. Moreover, as explained in staff’s accompanying release, SAB 121 was issued in response to demonstrated technological, legal, and regulatory risks that have caused substantial losses to consumers. By virtue of invoking the Congressional Review Act, it could also inappropriately constrain the SEC’s ability to ensure appropriate guardrails and address future issues related to crypto-assets including financial stability. Limiting the SEC’s ability to maintain a comprehensive and effective financial regulatory framework for crypto-assets would introduce substantial financial instability and market uncertainty,” the Media Release said. 4
- congress.gov: https://www.congress.gov/bill/118th-congress/house-joint-resolution/109/text[↩]
- ibtimes: https://www.ibtimes.com/kill-bill-biden-administration-vows-veto-resolution-overturning-controversial-sec-bulletin-3731582[↩]
- whitehouse https://www.whitehouse.gov/wp-content/uploads/2024/05/SAP-HJRes109.pdf[↩]
- whitehouse: https://www.whitehouse.gov/wp-content/uploads/2024/05/SAP-HJRes109.pdf[↩]
