Senate passes bill to challenge SEC, cryptocurrency custody restrictions may see a turnaround

Original title: SENATE PASSES BILL TO OVERTURN SEC RULE ON BITCOIN AND CRYPTO CUSTODY, BIDEN THREATENS VETO

Original author: NIK HOFFMAN, Bitcoin Magazine

Original translation: shushu, BlockBeats

Today, the Senate passed H.J.Res 109, which would overturn SEC Staff Accounting Bulletin (SAB) No. 121, preventing heavily regulated financial companies from custodial Bitcoin and other cryptocurrencies. The bill passed by a vote of 60 to 38, indicating bipartisan support for the measure.

SAB 121 imposes strict restrictions on financial institutions, prohibiting them from acting as custodians of digital assets such as Bitcoin. Pursuant to the Congressional Review Act, H.J.Res 109 seeks to remove these barriers, thereby enabling strictly regulated financial firms to provide custody services for Bitcoin and other cryptocurrencies.

However, the White House has made its position on the legislation clear. A recent statement stressed that if the bill reaches President Biden’s desk, he will veto it. The administration argues that overturning SAB 121 will “disrupt the SEC’s work to protect investors in the crypto asset markets and the broader financial system.”

However, supporters of H.J.Res 109 believe that overturning SAB 121 is essential to protecting American consumers. Much of this stems from a batch of spot Bitcoin ETFs that the SEC approved for trading earlier this year. Most of these Bitcoins are held by a small number of institutions, which poses a concentration risk. H.J.Res 109 aims to remove barriers and allow more strictly regulated institutions to custody and hold Bitcoin on behalf of their clients, thereby helping to alleviate centralization concerns.

Critics of SEC SAB 121 argue that the rule is overly restrictive and hinders the ability of financial institutions to meet the growing demand for Bitcoin services. They believe that given the existing compliance frameworks and security protocols of regulated institutions, they are able to address the risks associated with digital asset custody.

Senator Cynthia Lummis, an active Bitcoin advocate, supported and urged the overturning of SAB 121 earlier today, emphasizing that "SAB 21 is a rule under the Administrative Procedure Act disguised as accounting guidance, and it was issued by SEC staff without the approval of a majority of the Commission members."

However, Senator Elizabeth Warren urged the Senate to align with the Biden administration and vote against it, saying it is a completely different asset class than what banks and other regulated financial institutions are used to. She said it is a completely different asset class than what banks and other regulated financial institutions are used to. Digital assets are not physical things that banks can store in vaults, they are entirely online, so it is something that can be hacked, she said, citing the hacks of crypto exchanges Binance and FTX as evidence.

Despite Senate approval, the future of H.J.Res. 109 remains uncertain due to the president's threatened veto. If President Biden makes good on his promise, it would prevent the resolution from moving forward, maintaining the status quo for financial institutions to keep custody of digital assets. Biden can choose to sign, veto, or do nothing. If he chooses to do nothing, then the bill will go into effect without his signature.

Fox Business News reporter Eleanor Terrett commented on the news, saying: "The Senate has voted to overturn SAB 121, and we all know that the president said last week that he planned to veto the bill. If this is the case, it means that the Senate and the House of Representatives are back to square one, and both the Senate and the House of Representatives need a 2/3 majority vote to overturn the veto."

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