On May 16, 2024, a majority of the U.S. Senate passed the Congressional Review Act (CRA) to review Securities and Exchange Commission (SEC) Staff Accounting Bulletin No. 121 (SAB 121).
Passed by US Senate H.J.Res. 109 The vote was 60-38, an unprecedented turnout for a U.S. Congress.
In addition to the excellent support of HJRes. 109 votes, the vote was very bipartisan, 51-49 in favor of Democrats. Sen. Cynthia Lummis said the vote marks a new milestone, as it is the first time a vote has been taken during a legislative session. passed it “Independent Cryptography”.
But ahead of the House vote on the bill, President Biden threatened to use his executive powers to veto any resolution that would overturn the SEC’s policies.
The White House said it “strongly opposes” efforts by members of Congress to block the SEC’s actions to “protect investors in the crypto asset markets and protect the broader financial system.”
So, despite the Democratic revolt and subsequent presidential candidate Donald Trump’s public announcement that he is pro-crypto, will he now follow through on his threat? Approximately one-third of the previous administration’s threatened vetoes were not carried out, so threats alone do not mean that a veto sealed the deal.
Cryptocurrency bill has strong support from both camps
Perian Boling, founder and CEO of blockchain industry association Digital Chamber, emphasized how important it is that Congress passed HJRes. It has solid support like 109.
A quick look back at a historic day #cipher Washington, DC policy. Congress passed the repeal of SAB 121. pic.twitter.com/qMU3fVBkQD
— Perianne (@PerianneDC) May 16, 2024
Mr. Boling explained how the controversy surrounding SAB 121 led to 21 Democratic senators changing their rankings in support of the bill and ending with a vote of 12 Democratic senators.
She highlighted the inclusion of Chuck Schumer among the Democratic senators voting in support. Boling pointed out a related fact: “Mr. Schumer is the Senate Majority Leader and the second most powerful person in the country after President Biden.”
The former Congressional staffer and television anchor described how the Democratic endorsement should have felt like a “watershed moment” for the Biden administration. She argued that Schumer’s support could force the White House to “reconsider its strategy and position.” In her opinion, “the crypto tide is turning in Washington.”
The Biden administration may feel pressure beyond the political spectrum, as the crypto community is not the only one hoping Biden signs the HJRes. 109. The American Bankers Association has publicly prompted “President Biden should quickly sign this resolution into law to protect American consumers.”
The banking sector also has an economic incentive to offer crypto custody services, as it wants a piece of the pie from the ongoing retail crypto adoption.
The ball is in the White House’s court.
After HJRes. The Biden administration faces a complex decision because it has broad support from 109 people.
Biden will need to decide whether it is worth vetoing HJRes. This is because there is a risk of causing internal conflict within the party. With the next US election so close, is SAB 121 that important for the SEC to unleash a fight within the Democratic Party? Biden may need to weigh the pros and cons.
Patrick Kirby, head of policy at the Cryptocurrency Innovation Council, told Cointelegraph: “The president has 10 days (excluding Sundays) to sign the resolution without signing or vetoing it. He explained how the bill could be passed into law.
Biden’s ace is to “veto” SAB 121. This can occur when Congress is not in session to receive a signed or vetoed bill.Fox journalist Eleanor Terret explained How can a president stamp a resolution with his stamp of disapproval and keep it from becoming an act of Congress in its final session? Terret believes this could be “used as a strategic way to avoid too much political backlash.”
However, Biden may take into account Donald Trump’s alleged shift towards a crypto regulatory stance favorable to the crypto industry. Trump may have identified a loophole that he can exploit to steal support and votes from Biden ahead of the next election on November 5, 2024. As the challenges of SAB 121 became clearer, Trump’s strategy quickly shifted away from traditional policy. anti-bitcoin to positioning He himself is a pro-cryptocurrency presidential candidate.
Kirby explained what would happen if the president ultimately decides to veto HJRes. 109, Congress could seek to override it. Passage would require a “two-thirds majority of voters in both houses of Congress.”
SEC could resolve Biden’s veto dilemma by revoking SAB 121
Mr. Biden’s difficult dilemma of whether to follow through on his veto threat may have another solution that could be of great benefit to his administration.
The SEC may decide to remove SAB 121 to avoid forcing Biden to decide whether to veto it. Republican Wiley Nickel expressed how SEC Chairman Gary Gensler holds the key to ending the “political football” created by the SEC’s controversial cryptocurrency regulatory action.
If the SEC removes SAB 121 from policy, Biden won’t have to decide whether to veto Congress’ override.
SAB 121 has received criticism even within regulators.. May 17, 2024 Commissioner Hester Pierce explained At the Blockchain Summit hosted by the Digital Chamber in Washington, she spoke about how “bad” she felt regarding the SAB 121 policy.
Mr Pearce said the regulator had received a lot of feedback since the scheme was launched, citing “the fact that it’s not working” and “turning people away from the industry who would otherwise be coming into it”. He explained that he is claiming that
SAB 121 requires public companies, including banks, to record cryptoassets as both assets and liabilities on their balance sheets. Many lawmakers and industry leaders have criticized the SEC’s action, saying the practice goes against the traditional treatment of assets in custody, which typically don’t appear on balance sheets because they belong to customers, and could stifle innovation. It states that there is.
Pearce said he believes it is “positive” that “Congress is considering” the issue of regulating cryptocurrencies. For policy director Kirby, the vote is a victory for consumers who want to keep their digital assets safe, a victory for financial innovation and a “clear” statement. It signals that major policy changes should go through appropriate regulatory and legislative processes. ”
Mr. Biden, the SEC has the ball, so it’s up to them to decide what to do next.
