Moments ago, the Senate passed HJRes. 109 which would overturn the SEC's Staff Accounting Bulletin (SAB) No. 121, preventing highly regulated financial companies from holding Bitcoin and other cryptocurrencies. The legislation passed by a vote of 60 to 38, demonstrating bipartisan support for the measure.
BREAKING: 🇺🇸 Legislation That Would Overturn SEC Rule Preventing Highly Regulated Financial Firms From Holding Securities #Bitcoin and crypto passes the Senate. pic.twitter.com/GDyJRCMCxy
– Bitcoin Magazine (@BitcoinMagazine) May 16, 2024
The resolution, which was already passed by the House last week, aims to dismantle SAB 121. This bill imposes strict restrictions on financial institutions, effectively prohibiting them from acting as custodians of digital assets such as Bitcoin. Under the Congressional Review Act, HJRes. Bill 109 aims to remove these barriers, allowing highly regulated financial companies to offer custody services for Bitcoin and other cryptocurrencies.
However, the White House has made its position on this legislation clear. A recent statement emphasized that if the bill reached President Biden's desk, he would veto it. The administration says rescinding SAB 121 “would disrupt the SEC's work to protect investors in crypto-asset markets and safeguard the financial system as a whole.”
Supporters of HJRes. 109, however, argue that overturning SAB 121 is crucial to protecting consumers in the United States. This largely comes from the batch of spot Bitcoin exchange-traded funds (ETFs) that were approved for trading by the SEC earlier this year. The majority of these bitcoins are held on behalf of a few institutions, which presents risks of centralization. HJRes. 109 aims to remove barriers to allow more highly regulated institutions to support and hold bitcoins on behalf of their clients, helping to alleviate any centralization concerns.
Critics of the SEC's SAB 121 argue that the rule is too restrictive and hinders the ability of financial institutions to meet the growing demand for Bitcoin services. They believe that regulated institutions are well equipped to manage the risks associated with the custody of digital assets, given their existing compliance frameworks and security protocols.
Senator Cynthia Lummis, a staunch Bitcoin advocate, urged her support for overturning SAB 121 earlier today, emphasizing: “SAB 21 is a rule of the Administrative Procedure Act, disguised as accounting guidelines. It was published by SEC staff without approval. of the majority of the commission.
JUST IN: 🇺🇸 U.S. Sen. Cynthia Lummis urges Senate to vote YES on legislation that would allow highly regulated financial companies to hold securities #Bitcoin and crypto.
She also stated "The safest place for digital assets is a self-hosted wallet." 👏 pic.twitter.com/5WnGHZSNP3
– Bitcoin Magazine (@BitcoinMagazine) May 16, 2024
Senator Elizabeth Warren, however, urged the Senate to align with Joe Biden by voting no, saying it is an entirely different asset class than banks and other regulated financial institutions are used to. She said digital assets are not something physical that banks can keep in a vault and are entirely online, so it is something that can be hacked, and cited hacks of crypto exchanges Binance and FTX as proof.
JUST IN: 🇺🇸 US Senator Elizabeth Warren urges Senate to vote NO on legislation that would allow highly regulated financial companies to hold securities #Bitcoin and crypto. pic.twitter.com/L6NwEVUseN
– Bitcoin Magazine (@BitcoinMagazine) May 16, 2024
Despite Senate approval, the future of HJRes. 109 remains uncertain due to the threat of a presidential veto. If President Biden keeps his promise, it would halt progress on the resolution, maintaining the status quo regarding financial institutions' custody of digital assets. Biden has the option to sign the bill, veto it, or do nothing. If he chooses to do nothing, the bill will go into effect without his signature.
Fox Business reporter Eleanor Terrett commented on the news: declaring“The Senate voted to overturn SAB 121, which, as we all know, means it's now headed to the President who said last week he plans to veto it. If that's the case case, then we are back to square one with the House and the Senate, which requires a 2/3 majority of votes in both chambers to override the veto.