Senate Set to Scrap Controversial SEC Crypto Accounting Rule

The U.S. Senate is expected to pass a House resolution overturning the Securities and Exchange Commission's (SEC) Staff Accounting Bulletin 121 (SAB 121), which critics argue unfairly restricts companies' ability to hold crypto assets. The resolution, if approved by the Senate and signed by President Biden, would block the SEC from issuing similar guidance in the future, despite the White House's threat to veto it. Despite bipartisan support, the potential for a presidential veto remains.

Senate Poised to Revoke Controversial SEC Crypto Accounting Rule

Washington, D.C., May 15, 2024

A House resolution aimed at overturning a contentious rule issued by the Securities and Exchange Commission (SEC) is poised to pass the Senate with bipartisan support, sources familiar with the matter have disclosed to CoinDesk.

The Staff Accounting Bulletin 121 (SAB 121) has come under fire from critics who contend that it unfairly restricts companies from holding crypto assets on their balance sheets. The bulletin has been blamed for deterring major custodians and other financial institutions from offering crypto custody services.

Last week, the House of Representatives voted to advance the House resolution disapproving of the SEC guidance. The resolution, if passed by the Senate and signed into law by President Biden, would invalidate SAB 121 and prevent the SEC from issuing similar guidance in the future.

However, the White House has threatened to veto the resolution, arguing that it "reflects considered SEC staff views" and could limit the SEC's ability to provide appropriate regulatory oversight of crypto-assets.

Despite the veto threat, the House resolution garnered support from a significant number of House Democrats and the vast majority of House Republicans.

Representative Mike Flood (R-Neb.), the resolution's sponsor, expressed optimism about its passage in the Senate, stating, "We're hopeful that it passes the Senate this week, and I think it's getting the SEC's attention that we're serious."

The Blockchain Association, a leading industry trade group, has also voiced its support for the resolution, calling it a "harmful, anti-crypto provision."

"We encourage the veto to be reconsidered, allowing this harmful, anti-crypto provision to be struck down," said Ron Hammond, the Blockchain Association's director of government relations.

The Senate is expected to hold a floor vote on the resolution on Thursday. According to a Senate source, the bill is in a strong position for passage, with the possibility of additional Democratic votes in its favor.

If the resolution passes the Senate, it will be subject to President Biden's signature. Should he veto the resolution, a two-thirds majority vote in both the House and Senate would be required to override the veto and enact the resolution into law.

The outcome of the Senate vote will have significant implications for the regulatory landscape surrounding crypto-assets in the United States. If passed, the resolution would represent a major setback for the SEC's efforts to impose stringent accounting standards on the crypto industry.