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5 Things to Know About the Upcoming SAB 121 Bill Vote

5 Things to Know About the Upcoming SAB 121 Bill Vote

The crypto market has recently crashed and the problems could double based on the voting results of the SAB 121 Bill. This bill was quite controversial among crypto investors and the platforms, leading to discussions about an alternative, but the sudden complication has pushed it back to its initial position. With politicians like Donald Trump and Biden divided over the acceptance and regulation of cryptocurrency, the SAB 121 Bill opened up a new dynamic.

1. What is the SAB 121 Act?

SAB 121 Bill stands for Staff Accounting Bulleting 121 Bill, filed by the Securities and Exchange Commission (SEC). It was issued on March 31, 2022 and has been in law for two years before the U.S. House of Representatives temporarily passed HJ Res. 109 to quash it.

Under the SAB 121 Bill, crypto companies are required to record customer crypto holdings on their balance sheets as liabilities. The SEC introduced this as an important measure to protect against the risks and uncertainties that come with crypto holdings.

2. House and Senate came together for the SAB 121 bill

Earlier in May, the full House and Senate met to vote on HJ Res. 109 to kill the SAB 121 Bill and supported the other by a majority. Initially, the House voted 228-182, with 228 in favor, with the majority being Republicans and 21 Democrats. The following week, the Senate votes were also in, with 60 in favor and 38 against. A few Democrats, such as Senate Majority Leader Chuck Schumer, the Senate Majority, and others, also voted in favor.

However, a veto overrode everything, which also raises the question of what crypto regulation will look like in the future if Bill does not gain a majority here.

3. The vetodilemma

Current US President Biden vetoed HJ Res. 109 and supported SAB 121. The bill is now back in Congress for re-examination and new vote by the representatives. Although SAB 121 is active until January next year, repealing the bill is only possible if the new vote gets a ⅔ majority in Congress. Only then can it override the president’s veto and become a law.

My administration will not support measures that jeopardize the well-being of consumers and investors. Appropriate guardrails that protect consumers and investors are necessary to realize the potential benefits and opportunities of crypto asset innovation, Biden says

4. SEC’s Debate on Transparency

SEC’s bulletin has become a topic of debate as they believe it is non-binding staff guidance that favors disclosures to investors. They have justified it as a regulation to improve crypto investor transparency.

The new law will limit the SEC’s involvement in regulation. However, the president has also spoken out in favor of the SEC. He believes that “limiting the SEC’s ability to maintain a comprehensive and effective financial regulatory framework for crypto assets would introduce significant financial instability and market uncertainty.”

An SEC spokesperson has previously made it clear that they’ve seen multiple crypto companies fail and investors fill bankruptcy courts hoping for a return on their investment. He added that they’ve also seen the risk to investors in these companies, who promise to protect their assets while keeping them off the balance sheet.

Proponents oppose the SEC’s stance on this issue, as no other financial asset is treated this way and has not become more stable. Cryptocurrency fraud and scams are also happening in stocks, bonds, and even gold.

5. The SAB 121 bill could have compromised safety

More than 20% of Americans are actively investing in cryptocurrencies and need satisfactory regulations that benefit investors, not just the government. The SAB 121 law is not only rejected by private companies, but the banking sectors also disagree with it because it restricts them from offering crypto custody. Rejecting this rule could provide opportunities for better acceptance and participation by the people in this sector.

The Bank Policy Institute, the American Bankers Association, and many others jointly wrote a letter to SEC Chairman Gary Gensler about amending the SAB 121 law. In it, they explain how the ban on banks offering crypto custody has driven investors to publicly traded companies. These companies jeopardize the safety and stability of the assets because they are not subject to regulatory oversight.

On the contrary, many believe that the SAB 121 Bill is the path to clarity and security as it will address very important issues such as security, taxation, and market stability. Moreover, they believe that it will provide higher stability for top cryptocurrencies such as Bitcoin and Ethereum.

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