Home Editor's Pick US Senate Throws Gensler a Curveball, First-Ever Crypto Bill Passed

US Senate Throws Gensler a Curveball, First-Ever Crypto Bill Passed


The US Senate has voted in favor of a Congressional Review Act (CRA) resolution that cancels out Staff Accounting Bulletin No. 121 (SAB121), issued by the Securities and Exchange Commission (SEC).

The bill is pending approval from US President Joe Biden. Whether he approves it or not will show his stance on the industry.

Senator Cynthia Lummis led the effort in the Senate following a similar vote in the House earlier this month. The resolution now goes to President Biden’s desk. If passed, it would effectively overturn SAB121.

The SEC May Squirm

On May 8, the House of Representatives voted to overturn the SEC’s SAB121. The vote resulted in 228 votes in favor and 182 votes against. 21 Democratic lawmakers voted in favor, while the rest of the party maintained their stance against the Republicans and vetoed the proposal.

However, the SAB121 might stay in effect as the Biden administration previously signaled a veto if the House voted.

The White House issued a statement prior to the vote threatening to veto the House. According to the Biden administration, limiting the SEC’s ability to maintain an effective and comprehensive regulatory framework for digital assets could result in financial instability.

“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,” said the White House’s statement.

Uncharted Territory

The Democratic Congresswoman Maxine Waters, also a member of the Financial Services Committee, accused officials of planning to reduce the SEC’s power.

On the bright side, the bipartisan support in the Senate is seen as a positive sign for future crypto legislation.

Supporters believe strong bipartisan support might convince Biden to reconsider the veto, especially with the participation of Senator Schumer, who also voted in favor of the resolution. They believe this could influence Biden’s decision.

Issued in 2022, the SEC’s SAB121 requires companies safeguarding crypto assets for customers to record them as both assets and liabilities on their balance sheets. This rule is considered strict and prohibitive as it discourages financial institutions from being exposed to crypto.

Lawmakers who support cryptocurrency believe the rule is an example of the SEC’s overreach in regulating the industry.

Efforts to enact cryptocurrency enforcement in the US are unlikely to succeed as the two parties that dominate American politics, Democrats and Republicans, still struggle to reach an agreement.

Not only that, cryptocurrency has become a new battlefield for lawmakers. While many want to bring crypto under the supervision framework, as shown by the SEC’s series of crackdown actions in recent years, others criticize these measures as too harsh and could stifle innovation.

A Republican also initiated the proposal to overrule the SEC’s SAB121 and received support from Congressman Patrick McHenry, Chairman of the House Financial Services Committee, member of the Republican Party, and editor of the stablecoin management bill pending review.

Under President Joe Biden’s leadership, the US government has received criticism from the cryptocurrency industry. The main reason is the ongoing suppression actions led by the SEC under the direction of Chairman Gary Gensler.

The SEC recently made headlines after the agency constantly targeted several major crypto entities like Uniswap, Consensys, and Robinhood and threatened to consider Ethereum (ETH) security.

According to CFTC Chairman Rostin Behnam, the SEC may continue to tighten crypto supervision over the next two years.

The ongoing clash comes amid the 2024 US Presidential Election. Cryptocurrency has also become a key part of the candidate’s campaign.

Donald Trump, former US president and this year’s candidate, has publicly vowed to create a supportive environment for crypto businesses in the US if elected. He also criticizes the Biden administration, claiming that Biden “doesn’t even know” what crypto is.

Standard Chartered suggested that Bitcoin and the crypto sector could benefit from Trump’s re-election.

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