The US Senate voted on May 16 to repeal the SEC’s Staff Bulletin 121 (SAB 121).
A total of 60 senators voted in favor of HJ Res. 109, a resolution to overturn the bulletin, with 38 senators voting against it.
The results show bipartisan support for reversing the SEC rule. Of the 60 senators who voted in favor of the resolution, 11 were Democrats, 48 Republicans and one independent.
Representative Wiley Nikkel commented that the latest vote “sends a clear bipartisan message” around the SEC’s alleged regulatory overreach. He added:
“We should never have resorted to using one [Congressional Review Act] to solve this problem, but unfortunately this is the only tool we have left.”
Congressman Tom Emmer approved a repeal of SAB 121, explain that crypto is “in a political tug-of-war” between executives and individuals, adding that a presidential veto would “destroy opportunities for Americans at the expense of Americans.”
Biden will likely veto
On May 8, the Biden administration published a notice saying President Joe Biden would veto the resolution if the Senate voted in favor.
The administration warned that overturning SAB 121 could hamper the SEC’s efforts to protect investors and the financial system.
On May 9, the House of Representatives voted 228 to 182 in favor of the resolution, after which it was passed to the Senate.
Votes in the Senate and House of Representatives show that a majority of lawmakers are in favor of the resolution. However, the final vote in the Senate is not high enough to override a presidential veto, which would require a two-thirds majority of both the Senate and House of Representatives.
SAB controversies
SAB 121 requires financial institutions and companies that safeguard their customers’ assets to keep those assets on their balance sheets.
The bulletin is controversial for a number of reasons. The American Bankers Association (ABA) believes that SAB 121 makes it prohibitively expensive for banks to act as spot managers of Bitcoin ETFs.
It also believes that SAB 121 does not distinguish between crypto on public ledgers and traditional assets on authorized ledgers. However, the association wants changes instead of a complete withdrawal.
Lawmakers, meanwhile, have criticized the bill, both for its content and for the way the SEC implemented the rule. Patrick McHenry claims the SEC was circumvented public comment and the rulemaking process through staff guidance.