Attempting to Overturn SEC Policies and Restrict Regulatory Power! U.S. Congress Passes Major Cryptocurrency Resolution

The U.S. House of Representatives voted 228 to 182 to pass a resolution aimed at overturning the controversial cryptocurrency accounting policy set by the Securities and Exchange Commission (SEC). Most Republicans supported the measure, with 21 Democrats voting in favor, but it's unclear whether the measure will become law.

The SEC first issued its cryptocurrency accounting bulletin in 2022, sparking controversy over the past year as the crypto industry worried it could hinder banks from safeguarding digital assets. It requires companies that hold custody of cryptocurrencies to record their clients' crypto holdings as liabilities on their balance sheets.

On Wednesday, May 8, the White House issued a "Statement of Administration Policy," saying President Biden would veto the resolution.

The White House said, "Restricting the SEC's ability to maintain a comprehensive and effective regulatory framework for crypto asset finance will lead to significant financial instability and market uncertainty."

Patrick McHenry, chairman of the House Financial Services Committee, spoke in the House on Wednesday, saying the bulletin requires banks to assume "enormous capital and liquidity."

He further explained, "This essentially makes it too expensive for financial institutions to custody clients' digital assets."

The resolution was proposed by Nebraska Republican Representative Mike Flood and Democratic Representative Wiley Nickel.

Earlier this year, in a statement made earlier on Wednesday, they said the bulletin "upends banks' custodial practices" and excludes them from the market.

On Wednesday, California Democrat Maxine Waters criticized the bill's proponents in the House for undermining the SEC's power.

"This bill requires a sledgehammer to solve a problem that needs a scalpel," Waters said, adding that the SAB 121 bill provides transparency, which helps prevent the fraud that leads to the collapse of cryptocurrency companies.

Waters also warned that overturning the bulletin could restrict the SEC's power in the future.

"If this resolution passes, the SEC will be barred from issuing any future guidance substantially similar to the contents of this resolution, including guidance on disclosure matters related to this issue," Waters said.

The measure could be sent to the Senate Banking Committee, and then be voted on by the full Senate. Republican Senator Cynthia Lummis of Wyoming has a companion measure in the Senate.

Cody Carbone, Vice President of Policy at the Chamber of Digital Commerce, said he expects the SAB 121 bill to pass in the Senate.

"I hope this bill will pass with broad bipartisan support because it has more to do with consumer protection and procedure than cryptocurrency," he said.

He added that a committee vote and a full vote might occur before lawmakers break for the August recess.