KEY POINTS
- Rep. Flood said the development should push the SEC to reverse course in its crypto approach
- Sen. Lummis said Senate didn't have to vote if Gensler was willing to have the bulletin revised
- Sen. Warren opposed the vote, saying the bulletin existed for enhanced transparency
The Senate has passed a resolution overturning a rather controversial U.S. Securities and Exchange Commission (SEC) bulletin that requires companies offering cryptocurrency custody services to hold their clients' assets in their balance sheets.
A total of 60 senators voted in favor of H.J. Res. 109 put forward by Rep. Mike Flood, R-Neb., on Thursday, while 38 senate members voted against it.
The House Committee on Financial Services commented on the resolution's victory in the Senate, calling on U.S. President Joe Biden to "sign this commonsense measure to foster innovation and protect consumers in the digital asset ecosystem."
#BREAKING: The Senate just passed @USRepMikeFlood's bipartisan CRA resolution to nullify the @SECGov's disastrous SAB 121.
— Financial Services GOP (@FinancialCmte) May 16, 2024
🚂 Next stop, the White House.@POTUS: sign this commonsense measure to foster innovation and protect consumers in the digital asset ecosystem. pic.twitter.com/BiK0NeBQnU
Flood also spoke about the resolution's senate passage, saying it is "clear" that there is overwhelming opposition to the regulatory agency's Staff Accounting Bulletin 121 (SAB 121). In a series of posts on X (formerly Twitter), Rep. Flood said the president should sign the resolution, so the SEC will be mandated to reverse its course and set the country "on a path to growing our digital financial future."
This is a landmark result for digital asset regulation. Both the House and Senate – including Majority Leader Schumer in the Senate – have delivered a clear, bipartisan message to the @SECGov that SAB 121 needs to go. https://t.co/naVqecDeOV
— Rep. Mike Flood (@USRepMikeFlood) May 16, 2024
Sen. Cynthia Lummis, R-Wyo., said during Wednesday's Senate vote that the session could have been avoided if SEC Chair Gary Gensler was "willing" to direct the agency's staff to revise the bulletin and keep customers' assets off of the custodial service providers' balance sheets.
She also pointed out that Gensler should have engaged "in a transparent process" with key players. She went on to blast Gensler and the SEC for "refusing to revisit" the contentious bulletin even after bipartisan criticism, saying revisiting old policies when new technologies emerge is "warranted and encouraged."
Lummis also wrote on X that the resolution's approval in the Senate was a "win for financial innovation" and a "clear rebuke" to the way both Gensler and the Biden administration have "persecuted" the digital assets space.
The Senate passing a CRA overturning SAB 121 is a win for financial innovation and a clear rebuke of the way the Biden admin and Gary Gensler have persecuted crypto.
— Senator Cynthia Lummis (@SenLummis) May 16, 2024
It also marks the 1st time Congress has passed standalone crypto legislation.
We are just getting started.
However, the Senate's vote didn't come without opposition from other lawmakers. Sen. Elizabeth Warren, D-Mass., said ahead of the vote that voting on the resolution was not necessary. She noted that the "substance" of SAB 121 was to enhance transparency, ensuring that investors are made aware of "special" risks related to crypto custodial services before they opt into such services.
House representatives passed the resolution in a 228-182 vote last week, to the applaud of the crypto community. However, the Biden administration released a statement ahead of the vote, saying Biden would ultimately veto the resolution if it reached his table.
The bulletin has long been under scrutiny by industry players, digital assets holders, some lawmakers, and financial institutions, including the Federal Deposit Insurance Corporation (FDIC), which blasted SAB 121 for not being in line with common custodian accounting practices.
