The US Senate has passed a measure to repeal the Securities and Exchange Commission's (SEC) circular on cryptocurrency custody standards, and now awaits an expected veto from President Joe Biden.
Senate vote Voting ended on Thursday with a majority of 60 votes to 38, which is less than the two-thirds percentage needed to override a veto. Many Democrats supported the resolution, including Senate Majority Leader Chuck Schumer of New York.
The legislative measure mirrors a similar move in the House of Representatives last week, where the measure passed by a vote of 228 to 182. Although Republicans had significant support, 21 Democrats also voted in favor of the resolution, indicating bipartisan support although not enough to counter a veto.
The disputed SEC Staff Accounting Bulletin, otherwise known as Saab 121It was first issued in 2022. It requires companies dealing with cryptocurrencies to list customer holdings as liabilities, a requirement that has sparked controversy and opposition within the cryptocurrency industry. Critics argue that such regulations could prevent banks from protecting digital assets.
“Removing the SEC’s regulatory authority over crypto assets would create significant financial instability and market uncertainty,” the White House stated, expressing its intention to maintain the circular.
Cody Carbone, vice president of policy at the Chamber of Digital Commerce, criticized the potential veto.
“A veto would be irrational,” Carbone said, urging the president to recognize bipartisan support for the resolution not as a criticism but as a consensus on prioritizing consumer protection over regulatory bias.
Under the Congressional Review Act (CRA), which allows Congress to examine and revoke agency rules, an SEC prospectus can be revoked. The Government Accountability Office last year designated SAB 121 as a rule subject to this law, contradicting the SEC's position that it does not qualify as such.
Ron Hammond, director of government relations at the Blockchain Association, commented on the possibilities of the decision, noting that a presidential veto is expected.
“This is not shocking, though, as a number of credit rating agencies during Biden’s tenure came to his desk on a partisan basis and were given veto power,” Hammond said.
Hammond also highlighted the growing participation from grassroots and industry sectors in discussions about cryptocurrency regulations in Washington, D.C