US Senate passes resolution overturning SEC crypto rule on banks

A majority of lawmakers in the United States Senate have passed a joint resolution calling for the Securities and Exchange Commission (SEC) to strike down a rule affecting financial institutions doing business with crypto firms.

In a 60 to 38 vote on May 16, U.S. Senators passed H.J.Res. 109, a resolution nullifying the SEC’s Staff Accounting Bulletin No. 121. The commission’s rule requires banks to keep customers’ digital assets on their balance sheets, with capital maintained against them — a measure many lawmakers and industry leaders have criticized as stifling innovation.

“The tally, a stunning 60 ‘Yeas’ in the Senate vote, sends a strong signal that both houses of Congress, across the political divide, clearly disapprove of this rule,” said the crypto advocacy group Blockchain Association in a May 16 X post.

On May 8, before the resolution passed the U.S. House of Representatives, President Joe Biden said he intended to veto the bill to “protect investors in crypto-asset markets and to safeguard the broader financial system.” If the U.S. President vetoes the legislation, it will return to Congress and require a two-thirds majority vote to pass again.

“The threat of a presidential veto denies the fact that there is a growing awareness among the voting public, particularly young people, that crypto is something our elected officials should care about,” said the Blockchain Association.

Related: Proposed US Blockchain Integrity Act would ban crypto mixers for 2 years

The vote represented an atypical bipartisan move by the U.S. Senate, split 51-49 in favor of Democrats. According to Senator Cynthia Lummis, it was the first time this session of Congress passed “standalone crypto legislation.” The White House did not immediately release a statement on the resolution passing.

“It is clear there is overwhelming opposition to SAB 121, and I urge [President Biden] to reconsider his previous statement of intent to veto the resolution,” said Representative Mike Flood, who sponsored the resolution.

The joint resolution could be a bellwether for a different crypto bill, the Financial Innovation and Technology for the 21st Century Act. The legislation clarifies the roles the SEC and Commodity Futures Trading Commission would have in regulating digital assets. It passed out of committee in July 2023 and is expected to be introduced in the House for a floor vote in May.

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