Moments ago, the Senate passed HJRes legislation. 109 would repeal the SEC's Staff Accounting Bulletin (SAB) No. 121, preventing highly regulated financial companies from sponsoring Bitcoin and other cryptocurrencies. The legislation passed by a vote of 60 to 38, showing bipartisan support for the measure.
BREAKING: ๐บ๐ธ Legislation that would repeal an SEC rule preventing highly regulated financial firms from custody #Bitcoin Cryptocurrencies pass through the Senate. pic.twitter.com/GDyJRCMCxy
โ Bitcoin Magazine (@BitcoinMagazine) May 16, 2024
The resolution, which was already passed by the House of Representatives last week, aims to dismantle SAB 121. This circular imposes strict restrictions on financial institutions, effectively preventing them from acting as custodians of digital assets such as Bitcoin. Under the Congressional Review Act, HJRes. Bill 109 seeks to remove these barriers, thus enabling highly regulated financial companies to offer custody services for Bitcoin and other cryptocurrencies.
However, the White House has made its position on this legislation clear. A recent statement stressed that if the bill reaches President Biden's desk, he will veto it. The administration argues that repealing SAB 121 would โdisrupt the SECโs work to protect investors in crypto asset markets and protect the broader financial system.โ
Supporters of HJRes. However, the 109th believes that repealing SAB 121 is critical to protecting U.S. consumers. Much of this stems from the group of Bitcoin exchange-traded funds (ETFs) that were approved for trading by the Securities and Exchange Commission earlier this year. The majority of these bitcoins are held on behalf of a small number of institutions, posing centralization risks. HJRes. Act 109 seeks to remove barriers to allow more regulated institutions to take over and hold Bitcoin business on behalf of customers, helping to alleviate any centralization concerns.
Critics of the SEC's SAB 121 argue that the rule is overly restrictive and hinders financial institutions' ability to meet growing demand for bitcoin services. They believe that regulated institutions are well-equipped to deal with the risks associated with custody of digital assets, given their existing compliance frameworks and security protocols.
Senator Cynthia Lummis, a staunch Bitcoin advocate, urged her support for repealing SAB 121 earlier today, asserting that โSAB 21 is a rule under the Administrative Procedure Act, disguised as accounting guidance. It was published by SEC staff without Approved by a majority of the committee.
JUST IN: ๐บ๐ธ US Senator Cynthia Lummis urges Senate to vote yes on legislation allowing highly regulated financial firms to incubate #Bitcoin And encryption.
Also reported "The safest place for digital assets is a self-hosted wallet." ๐ pic.twitter.com/5WnGHZSNP3
โ Bitcoin Magazine (@BitcoinMagazine) May 16, 2024
However, Senator Elizabeth Warren urged the Senate to align with Joe Biden by voting no, noting that this is a very different asset class than what banks and other regulated financial institutions are accustomed to. She said that digital assets are not a physical thing that banks can keep in a vault and are completely online, and therefore something that can be hacked, and cited the hacks of cryptocurrency exchanges Binance and FTX as her evidence.
JUST IN: ๐บ๐ธ US Senator Elizabeth Warren urges Senate to vote 'no' on legislation allowing highly regulated financial firms to incubate #Bitcoin And encryption. pic.twitter.com/L6NwEVUseN
โ Bitcoin Magazine (@BitcoinMagazine) May 16, 2024
Despite Senate approval, the future of HJRes. 109 remains uncertain due to the threat of presidential veto. If President Biden follows through on his promise, it will halt the resolution's progress, maintaining the status quo regarding custody of digital assets by financial institutions. Biden has options to sign the bill into law, veto it, or do nothing. If he chooses to do nothing, the bill becomes law without his signature.
Fox Business Channel journalist Eleanor Teret commented on the news, saying: It helpsโThe Senate has voted to repeal SAB 121, which means, as we all know, this now heads to the President who said last week he intends to veto it. If so, it will be back to square one with the House and Senates who would do so would need a two-thirds majority vote in both chambers to override a veto.โ
