US Senate passes resolution to repeal SEC’s SAB 121
The U.S. Senate recently passed HJRes. 109, a resolution that seeks to repeal the SEC's Staff Accounting Bulletin (SAB) No. 121, which prohibits regulated financial firms from providing custody services for cryptocurrencies such as Bitcoin. The bill, which received bipartisan support, was approved by a vote of 60-38 after passing the House of Representatives the previous week.
Background to SAB 121 and Resolution HJRes. 109
SAB 121 currently imposes restrictions that prevent financial institutions from acting as custodians of digital assets, citing the need to protect investors and ensure the safety of the financial system. The resolution, HJRes. 109, aims to remove these restrictions to allow more regulated entities to securely manage cryptocurrencies, which some say could reduce the risks of centralization posed by a small number of institutions holding large amounts of bitcoin.
Arguments of supporters and critics
Proponents such as Senator Cynthia Lummis argue that regulated financial institutions are able to securely manage the custody of digital assets, despite their online nature and lack of physical storage. Critics, including Senator Elizabeth Warren, claim that digital assets are inherently risky, vulnerable to hacks, and significantly different from traditional banking assets, pointing to incidents at cryptocurrency exchanges such as Binance and FTX as evidence of these vulnerabilities.
Statement by President Biden
Despite Senate approval, President Biden has signaled his intention to veto the bill, which he says would undermine the SEC's efforts to protect the crypto-asset market and the financial system as a whole. If Biden vetoes, overriding the veto would require a two-thirds majority in both the Senate and House.
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