WASHINGTON — The House
The resolution now goes to the Senate, where companion legislation is sponsored by Sen. Cynthia Lummis, R-Wyo.
Even if the Congressional Review Act resolution passes the Senate, however, the effort would likely end at President Joe Biden's desk, following Biden's promise yesterday to veto the legislation. The White House said that passing the Congressional Review Act resolution would "inappropriately constrain the SEC's ability to ensure appropriate guardrails and address future issues related to crypto-assets including financial stability.
"Limiting the SEC's ability to maintain a comprehensive and effective financial regulatory framework for crypto-assets would introduce substantial financial instability and market uncertainty," the White House said.
The legislation isn't without bipartisan support — 21 Democrats in the House voted to advance the resolution — but the measure didn't pass by a wide enough margin to override the president's veto.
House Financial Services Committee Chairman Rep. Patrick McHenry, R-N.C., argued on the House floor that the accounting bulletin, known as SAB 121, requires banks safeguarding cryptocurrencies to hold those assets on their balance sheets.
"That means banks would be required to take on significant capital, liquidity and other costs under the existing prudential regulatory framework," he said. "This essentially makes it cost prohibitive for financial institutions to custody their customers' digital assets. This is a massive deviation from how highly regulated banks are traditionally required to treat the assets they hold on behalf of their customers. Let's be clear, this change is not for the better."
Rep. Maxine Waters, D-Calif., the panel's ranking member, argued on the House floor against the resolution. Waters said that overturning the accounting bulletin, which she said could be changed to address custody banks' concerns "really has much more far-reaching negative consequences."
"To be clear, even this special interest group has expressed support for the disclosure guidance in SAB 121," Waters said. "They are only concerned about how the accounting guidance applies to their balance sheet."
Instead, she said, passing the SAB 121 resolution would prevent the SEC from pursuing changes that might satisfy custody banks.
"The consequences of using a CRA, rather than a more narrowly tailored bill, go beyond simply overturning SAB 121 entirely when the aforementioned concerns from special interests only have to do with one piece of it," she said. "If this resolution is passed, the SEC would be prohibited from issuing any guidance in the future that is substantially similar to this one, including disclosure guidance on this issue."
