Senate approves resolution overturning SEC’s crypto asset rule

The U.S. Senate passed a resolution overturning the U.S. Securities and Exchange Commission’s (SEC) Staff Accounting Bulletin (SAB) 121.

SAB 121 provides guidance for entities related to the accounting treatment of obligations to safeguard crypto assets.

Last November, a bipartisan group of Congress members, including U.S. Sens. Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-NY), along with U.S. Reps. Wiley Nickel (D-NC), Mike Flood (R-NE), Patrick McHenry (R-NC), French Hill (R-AR), and Ritchie Torres (D-NY), urged financial regulators to clarify that SAB 121 is not enforceable after the Government Accountability Office (GAO).

It was then determined that the rule should be addressed by a Congressional Review Act (CRA) resolution. On Feb. 1, Lummis, Nickel, and Flood introduced a bipartisan, bicameral Congressional Review Act resolution to overturn the U.S. Securities and Exchange Commission’s Staff Accounting Bulletin 121. The resolution passed in the Senate by a vote of 60 – 38. It had earlier been approved in the House.

“SAB 121 was a disaster from the start. The SEC should never set policy—over banks, no less, an industry they do not regulate—through a staff accounting bulletin. This is nothing more than this administration attempting to skirt the law while also eliminating critical consumer protections,” Lummis said. “This is a win for financial innovation and a clear rebuke of the way the Biden administration and Chair Gary Gensler have treated crypto assets and marks the first time both chambers of Congress have passed standalone crypto legislation. President Biden needs to take note of the bipartisan support this CRA received in both the House and Senate and sign this into law.”

SIFMA, an organization that represents broker-dealers and asset managers, commended the resolution’s passage.

“The significant bipartisan vote in both Chambers of Congress shows a stark contrast between Congress and the SEC. SAB 121 would fundamentally change the way financial institutions are expected to account for the custody of digital assets, and the SEC issued the SAB without stakeholder engagement or consultation with the prudential regulators. This CRA would benefit investors, financial markets, and the broader public by restoring the ability of well-regulated financial institutions to provide digital asset custodial services. We urge President Biden to promptly sign this resolution into law,” SIFMA president and CEO Kenneth E. Bentsen, Jr. said.

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