The next two weeks could be decisive for the crypto industry as it faces significant legislative developments in the US Congress. These developments could potentially reshape the regulatory landscape for digital assets in the United States.
3 major crypto laws up for vote
The community is closely following the upcoming Senate vote on repeal of Staff Accounting Bulletin No. 121 (SAB 121). Originally issued by the Securities and Exchange Commission, SAB 121 requires financial institutions to report on their balance sheets the digital assets they hold in custody for their customers.
This practice departs from traditional custodial asset management, which does not consider custodial assets as part of a company’s balance sheet. Critics argue that this could unfairly inflate a bank’s assets and liabilities, leading to increased capital reserve requirements and potentially stifling the growth of cryptocurrency custody services.
Last week, the House of Representatives saw a bipartisan effort to repeal the regulation, with 21 Democrats joining Republicans. “Last week, 21 Democrats voted hard and joined Republicans to repeal the SEC’s SAB 121. This is an important issue for banks/crypto and a personal priority for SEC Chairman Gensler “, said Ron Hammond, director of government relations at the Blockchain Association via
The Senate, led by Senator Cynthia Lummis, should follow suit this week. However, President Biden has indicated his intention to veto the repeal, which requires a difficult two-thirds majority in Congress to override the veto.
“Given the very slim majorities in both chambers, we have seen a few Congressional Review Acts (CRAs) reach the President’s desk on a bipartisan basis, but have failed at this point. This requires a 2/3 vote of Congress to overturn. Biden plans to veto such a difficult hill to climb,” Hammond remarked.
Another key legislative item on the agenda is a bill introduced by Reps. Larry Bucshon and Lisa Blunt Rochester. Set for a vote this week, the bipartisan initiative requires the Department of Commerce to be the principal advisor to the president on blockchain issues. The bill also proposes the creation of an advisory group within the Department of Commerce to further integrate blockchain technology into federal governance and policymaking.
Another highly anticipated legislative breakthrough is the upcoming vote on the FIT 21 bill, scheduled for around May 23-24. Authored by Patrick McHenry, Chairman of the House Financial Services Committee, the bill represents the first comprehensive attempt to establish a regulatory framework for cryptocurrencies at the federal level.
“FIT 21 is the legacy of Patrick McHenry and the first time Congress will vote on a regulatory framework for crypto. This is a moment that has been almost a decade in the making,” Hammond noted. The bill has received considerable attention and its amendments will be crucial in shaping its final form, attracting both Democratic and Republican lawmakers.
Political and regulatory context
These legislative efforts come amid increased regulatory oversight from the SEC under Gary Gensler and broader concerns expressed by the Biden administration regarding alleged risks associated with crypto assets.
THE the administration argues that SAB 121 is vital to protect investors and maintain the stability of the financial system. Conversely, many in Congress and the industry believe the SEC’s current approach hinders innovation and fails to provide clear compliance guidance.
Additionally, the intersection of crypto politics and election year dynamics cannot be underestimated. With former President Donald Trump’s recent supporters cryptocurrency and its bipartisan potential, crypto policy is emerging as an important campaign issue.
“Trump inserting himself into crypto presents little political risk, but given the bipartisan campaign victories, crypto gained momentum in the primaries,” Hammond noted. This positions crypto as a unique issue that could influence voter demographics, particularly among younger voters who have shown continued interest in digital asset technologies.
At press time, the total crypto market cap stood at $2.208 trillion, still 37% off its November 2021 all-time high.
Featured image by Ian Hutchinson/Unsplash, chart by TradingView.com
