In light of Biden’s threatened veto, the House will vote on repealing the SEC’s crypto advice, exposing a partisan divide over the regulation of digital assets.
TakeAway Points:
- House votes against SEC’s crypto policy (SAB 121), which has been criticised for discouraging banks from investing in cryptocurrency, but Biden threatens to veto the bill.
- Bipartisan legislative attempts to reverse SAB 121 have been triggered by its treatment as staff guidance rather than through a rulemaking procedure.
- In defence of the SEC, Biden points out concerns about financial stability; an overturn could restrict the SEC’s future ability to regulate cryptoassets.
Congress challenges SEC’s crypto-guidance
The Securities and Exchange Commission’s (SEC) contentious cryptocurrency accounting guidance, Staff Accounting Bulletin No. 121 (SAB 121), is set to be the subject of a crucial vote in the U.S. House of Representatives.
This guidance has caused controversy because some believe it will discourage banks from working with cryptocurrency customers by making them disclose customer-held digital tokens on their balance sheets, which could result in large capital costs.
The resolution’s sponsor, Rep. Mike Flood (R-Neb.), charged that SEC Chair Gary Gensler intentionally excluded large banks from the crypto custody market by using the guidance and chastised him for not consulting banking regulators.
President Joe Biden has indicated a strong objection signalled resolution, despite the House’s efforts. He has threatened to veto it should it succeed, citing the guidance’s role in addressing dangers that have resulted in losses for consumers.
“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.” Biden said.
Guidelines are defended by the SEC and the White House
Gary Gensler, the chair of the SEC and the White House, has defended SAB 121 and stressed its significance in reducing the legal, regulatory, and technological risks associated with the cryptocurrency industry. Speaking about the volatile world of crypto-assets, President Biden underlined the need for the SEC’s work in maintaining market stability and financial stability.
Republicans in Congress and companies that deal with digital assets, on the other hand, consider the guidelines to be excessive and a barrier to the adoption of cryptocurrency services by conventional banks. This stands in sharp contrast to their opinions.
Bipartisan Initiatives and their Legislative Consequences
Sen. Cynthia Lummis (R-Wyo.) is supporting a similar motion in the Senate, which further emphasises the bipartisan character of the problem. Rep. Flood introduced the resolution to reject SAB 121 with two Democrats.
The SEC’s rule was overturned via the Congressional Review Act, which underscores the possible long-term effects on the SEC’s future ability to regulate cryptoassets. Opponents such as Representative Maxine Waters (D-Calif.) contend that the resolution is an excessive response that may jeopardise the SEC’s capacity to successfully regulate the sector and the essential crypto disclosures.
Regulators’ Scrutiny and Cryptocurrency Mixers
Legislation to combat money laundering through cryptocurrency mixing services is being prepared by a number of House Democrats, spearheaded by Rep. Sean Casten (D-Ill.), in tandem with the discussion surrounding SAB 121.
This action is in line with current efforts to combat illegal finance in the cryptocurrency area, which is being discussed in relation to the regulatory framework of the industry as a whole. Despite encountering obstacles in the House with a Republican majority, the proposed law demonstrates the legislative emphasis on preventing the improper use of crypto technology for illicit purposes.
