Senate Democrats and Republicans have clashed over a Securities and Exchange Commission (SEC) accounting policy regarding cryptocurrency. The Senate voted to cancel Staff Accounting Bulletin 121, which requires banks and digital asset custodians to treat digital assets as liabilities and maintain them at fair value on their balance sheets. Despite President Joe Biden’s promise to veto the joint resolution, eleven Democrats, including Senate Majority Leader Chuck Schumer, joined Republicans in undoing the SEC guidance on crypto accounting. The resolution passed the House in a bipartisan vote and is now awaiting President Biden’s decision.
The White House has signaled that the resolution will be vetoed, arguing that SAB 121 protects crypto-asset markets and the broader financial system from potential crises. However, members from both parties have expressed concerns about the policy. Representative Wiley Nickel accused the SEC of turning cryptocurrency into a political issue and urged SEC Chair Gary Gensler to withdraw from the matter. GOP Majority Whip Tom Emmer stated that overturning SAB 121 is a win for financial innovation and a rejection of how the current administration has treated crypto.
Proponents of the rule believe it would address regulatory, legal, and technological risks that negatively impact consumers. Critics argue that it disincentivizes companies and major custodians from holding cryptocurrency assets for clients, potentially keeping banks out of the crypto markets. The American Bankers Association applauded the congressional action, calling it a bipartisan rebuke of the SEC’s decision. They emphasized the importance of bank custodians for digital assets in providing safe and sound digital asset services to consumers.
Crypto advocates celebrated the Senate vote as a win for Bitcoin. They believe that it reflects growing support for cryptocurrency among Wall Street, the House of Representatives, and now the Senate. The Blockchain Association, a crypto advocacy organization, described the vote as “stunning” and a clear disapproval of the SEC rule. They argued that there is a growing awareness among the voting public, particularly young people, that crypto is an issue that elected officials should care about.
SEC Chair Gary Gensler has been vocal in his opposition to cryptocurrency. In June 2023, he stated that the U.S. economy does not need more digital currency as it already has digital investments like the dollar, euro, and yen. He compared the crypto industry to fraudsters and Ponzi schemes of the 1920s, emphasizing the need for federal securities laws. In July 2023, Gensler requested additional budget funding to regulate the “Wild West of the crypto markets.” The SEC has also achieved legal victories in its pursuit of regulating crypto.
Critics accuse the SEC of unfairly targeting crypto, but the SEC’s enforcement director, Gurbir Grewal, maintains that the federal securities laws apply equally to everyone. The SEC aims to ensure compliance and prevent fraudulent activities in the crypto markets. The ongoing debate and actions surrounding cryptocurrency regulation reflect the complex and evolving nature of this emerging asset class.
 accounting policy on cryptocurrency. The Senate voted to cancel the policy, prompting concerns about the impact on digital asset markets. While President Joe Biden's veto is expected, both parties have expressed their opinions on the matter. Explore the arguments for and against the policy, as well as the implications for banks and custodians. Additionally, learn about the SEC's stance on cryptocurrency and its efforts to regulate the market. Stay informed on the evolving landscape of this emerging asset class.){kind=link}