QUICK TAKE:

• U.S. Senate and House vote to repeal SEC’s SAB 121 accounting rule.
• President Biden is expected to veto the repeal.
• Bipartisan support for repeal, but not enough to override a veto.
• The SEC’s SAB 121 faced criticism for imposing strict capital requirements on crypto custodians.

The recent U.S. Senate vote to repeal the SEC’s controversial Staff Accounting Bulletin (SAB 121) marks a significant moment for the crypto industry. While the measure passed both the Senate and the House of Representatives, it now faces a likely veto from President Biden, who has expressed support for the SEC’s stance. This development raises questions about the future of crypto legislation and regulatory oversight in the United States.

Background and Controversy SAB 121, introduced by the SEC, imposed stringent capital requirements on crypto custodians. This rule has been widely criticized by both the crypto and banking industries, who argue that it creates unnecessary financial burdens. The bipartisan effort to repeal SAB 121 highlights a rare alignment of interests between these typically opposing sectors.

Legislative Journey The Senate’s 60-38 vote to repeal SAB 121 fell short of the threshold needed to override a presidential veto. Despite support from notable Democrats, including New York Senator Chuck Schumer, the repeal’s future remains uncertain with President Biden’s anticipated veto. This outcome underscores the complexities of navigating crypto legislation in a highly polarized political environment.

Diverse Opinions on the Vote’s Significance The repeal vote has sparked a debate about its implications for broader crypto regulation. Critics of SAB 121, like the Government Accountability Office, argue that the SEC implemented the rule without proper congressional oversight. On the other hand, supporters like Senator Elizabeth Warren maintain that the rule is necessary to account for the unique risks associated with cryptocurrencies.

Industry Reactions and Future Prospects The bipartisan support for repealing SAB 121 suggests a growing recognition of the need for balanced crypto regulations. James Wester, director of crypto and co-head of payments at Javelin, voiced skepticism about the vote’s impact, suggesting that some Democrats might have supported the repeal knowing it would ultimately be vetoed by the President.

Potential Impact on Future Legislation The vote on SAB 121 could influence upcoming legislative efforts, such as proposed stablecoin regulations and market structure bills. The apparent willingness of some lawmakers to support crypto-friendly measures indicates a potential shift towards more nuanced and supportive regulation. However, the expected presidential veto highlights the ongoing challenges in achieving meaningful regulatory reform in the crypto space.

Conclusion The Senate vote to repeal SAB 121 is a noteworthy development in the ongoing debate over crypto regulation. While the repeal faces a significant hurdle with President Biden’s anticipated veto, the bipartisan support for the measure reflects a shifting landscape. As lawmakers continue to grapple with the complexities of regulating digital assets, the outcome of this vote may signal future directions for U.S. crypto policy. The evolving regulatory environment will be closely watched by industry stakeholders and investors alike, as it will significantly impact the growth and adoption of cryptocurrencies in the coming years.