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U.S. Congress Overwhelmingly Rejects SEC’s SAB 121: What’s Next?

Us Regulation Crypto, Fit21

On May 16, 2024, the U.S. Senate took a big step by passing the Congressional Review Act (CRA) to review the Securities and Exchange Commission (SEC) Staff Accounting Bulletin No. 121 (SAB 121). The resolution, H.J. Res. 109, was backed by a great number of people, and it passed with a vote of 60 to 38, which shows that both parties were working together for this cause. This vote had 21 Democratic Senators who did not follow their party’s line and voted for the bill, which is proof that there is a political consensus on crypto regulation.

Biden’s Veto Threat

Although the Congress had approved it, President Biden had earlier said that he would veto the resolution, which was to be aimed at overturning the SEC’s policy. The White House said that it is “firmly against” the actions of those who are trying to disrupt the SEC measures, which were designed to protect investors in crypto-asset markets while at the same time safeguarding the whole financial system. This position emphasizes the government’s will to have strict regulatory frameworks in the financial sector.

Crypto Bill Receives Wide Approval

Perianne Boring, the founder and CEO of the blockchain trade association Digital Chamber, stressed that it was necessary for Congress to pass H.J. Res. 109 with strong support. Boring pointed out that SAB 121 was so controversial that it made 21 Democratic Senators support the bill, among them Senate Majority Leader Chuck Schumer. This bipartisan support means that the Biden administration may have to change its cryptographic regulations.

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The White House’s Dilemma

The Biden administration is in a dilemma. The vetoing of the resolution could result in a civil war within the Democratic Party, especially with the next U.S. elections approaching. Patrick Kirby, the policy lead for the Crypto Council for Innovation, said that the President has ten days (except Sundays) to sign a resolution and make it law without his signature or veto. Another option is a “pocket veto,” in which the president can let the bill die if Congress is not in session.

External Pressures and Political Maneuvers

The Biden administration is not only faced with political pressure but also social pressure. The American Bankers Association has asked President Biden to sign the resolution so that it can be a law and protect American consumers, as well as support, through this, the banking sector’s interest in offering custody services for cryptocurrencies. Furthermore, former President and presidential candidate Donald Trump’s pro-crypto stance is a political strategy in itself. The change of Trump from his anti-Bitcoin position to his support for crypto can affect the voter mood before the November 2024 elections.

Potential SEC Reconsideration

The solution to the conflict is possibly in the SEC itself. Commissioner Hester Pierce was a part of the Blockchain Summit, and she said that SAB 121 has been criticized heavily and may even make industry participation decrease. If the SEC annuls SAB 121, President Biden will not have to make a tough veto decision.

Awaiting the Next Move

The SEC’s decision on SAB 121 is a crucial point in the Biden administration’s choice of action. The controversy shows the never-ending fight between regulations and innovations in a very fast-growing cryptosphere. Being broadly supported by the Congress and being of great public and industry interest, the next steps taken by both the White House and SEC will be observed very closely by all concerned.

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