Cryptocurrencies

On May 16, 2024, a majority of lawmakers in the US Senate passed the review act

On May 16, 2024, a majority of lawmakers in the U.S. Senate passed the Congressional Review Act (CRA) to revise the Securities and Exchange Commission (SEC) Staff Accounting Bulletin No. 121 (SAB 121).

US Senators passed HJRes. 109 by a majority of 60 to 38 votes, which is an exceptional percentage for the US Congress.

Plus premium support for HJRes. In 109, the vote was largely bipartisan, 51-49 in favor of Democrats. According to Senator Cynthia Lummis, the vote marked a new milestone because it was the first time Congress had been in session Passed “Independent encryption legislation.”

But before the House voted on the bill, President Biden threatened to use his executive authority to veto if there was a decision to overturn the SEC’s policy.

The White House said it “strongly opposes” the House members’ efforts to filibuster the SEC’s actions to “protect investors in crypto-asset markets and protect the broader financial system.”

Will he carry out the threat now, despite the Democratic rebellion and with presidential candidate Donald Trump later emerging as a crypto supporter? About a third of threatened vetoes in previous administrations were never carried out, so a threat alone does not mean a veto has been reached.

Huge support from both sides for the cryptocurrency bill

Berriane Boring, founder and CEO of the Digital Blockchain Trade Association, highlighted how important it is for Congress to approve HJRes. 109 with this strong support.

Boring explained how the controversy surrounding SAB 121 caused 21 Democratic senators to come out and support the bill, and it ended with a 12-vote majority of Democratic senators.

She highlighted how Chuck Schumer was among the supportive Democratic senators’ voices. Boring pointed out a related fact that “Schumer is the Senate Majority Leader and the second most powerful person in the country, second only to President Biden.”

The former congressional staffer and television host described how the Democrats’ support should have felt like a “defining moment” for the Biden administration. She claimed that Schumer’s support may force the White House to “rethink its strategy and position.” In her opinion, “the tide is turning toward cryptocurrencies in Washington.”

The Biden administration may feel pressure beyond the political sphere as the cryptocurrency community is not the only sector that would like Biden to sign the HJRes. 109. The American Bankers Association has publicly urged “President Biden to move quickly to sign this resolution into law to help protect American consumers.”

The banking sector has an economic incentive to offer custody services for cryptocurrencies, as banks also want a piece of the pie from the continued retail adoption of cryptocurrencies.

The ball is now in the White House’s court

After HJRes. 109 broad support The Biden administration has a complex decision to make.

Biden will have to weigh whether it’s worth vetoing the House. 109 Because he might risk opening an internal conflict in his party. Is SAB 121 absolutely necessary for the SEC to open an internal fight within Democrats when the next US election is so close? Biden may have to weigh the pros and cons.

HJ Res 109 Veto Threat – Source: The White House

Patrick Kirby, policy officer at the Cryptocurrency Innovation Council, explained to Cointelegraph how “the president has 10 days (excluding Sundays) to sign the resolution into law, and allow it to become law without signing, or vetoing it.”

The best thing Biden has up his sleeve is to use his “veto” SAB 121; This can happen if Congress is not in session to receive the signed or vetoed bill. Fox journalist Eleanor Terrett explained how a president can give a stamp of disapproval, cement the decision, and ultimately not become law of Congress while it is not in session. Teret believes it can be “used as a strategic way to not get as much political backlash.”

However, Biden may take into account Donald Trump’s alleged shift toward a crypto-friendly regulatory stance for the cryptocurrency industry. Trump may have identified a loophole that he can exploit to rip support and votes away from Biden in the upcoming election on November 5, 2024. As the SAB 121 challenges unfold, Trump’s strategy has quickly moved from being anti-Bitcoin to putting himself in a better position. Pro-encryption presidential candidate.

Kirby explained how if the president finally decides to veto HJRes. 109, Congress may try to override it. To be successful, it requires “a two-thirds majority of those voting in both Houses of Congress.”

The SEC could resolve Biden’s veto dilemma by repealing SAB 121

Biden’s difficult dilemma of whether or not to follow through on his veto threat may have another solution that would greatly benefit his administration.

The SEC could decide to remove SAB 121 to avoid forcing Biden to decide whether to use his veto power. Republican Willie Nickel expressed how SEC Chairman Gary Gensler holds the key to ending the “political football” created by the SEC’s controversial regulatory action on cryptocurrencies.

On May 16, 2024, A Majority Of Lawmakers In The Us Senate Passed The Review Act
Source: Rep. Wiley Nickel

If the SEC removes SAB 121 from its policy, Biden would not have to decide whether to veto repeal from Congress.

SAB 121 has also received criticism within the regulatory body. On May 17, 2024, Commissioner Hester Peirce explained at the Blockchain Summit, hosted by the Digital Chamber in Washington, how “bad” she felt regarding the SAB 121 policy.

Pearce explained that since its launch, the regulatory body has received a lot of backlash, claiming “the fact that it doesn’t work” and how it “keeps people out of the industry who might otherwise get into it.”

SAB 121 requires listed companies, including banks, to record cryptocurrency assets as assets and liabilities on the balance sheet. Many lawmakers and industry leaders criticized the SEC’s action, saying it could stifle innovation because the practice conflicts with the traditional treatment of assets subject to custody, which typically do not appear on the balance sheet because they are owned by the client.

Pierce said she believes it is “positive” that Congress is “thinking” about regulatory issues for cryptocurrencies. For policy leader Kirby, this vote is a win for consumers looking to keep their digital assets safe, a win for financial innovation, and a “clear victory.” An indication that major policy changes must go through appropriate regulatory and legislative processes.

Biden, since the ball is in the SEC’s court, the next step is on them.

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