US House lawmakers are debating a proposal that seeks to restrict the US Securities and Exchange Commission’s (SEC) ability to implement an accounting rule for cryptocurrencies.
The measure is part of a broader bill outlining funding for government agencies through September 2025. That bill includes cuts to the SEC’s budget and limitations on its regulatory policies.
Under the House Appropriations Committee’s bill, the SEC would also see an annual budget cut, reducing it by nearly $145 million. Additionally, the proposal prohibits the SEC from implementing or enforcing Staff Accounting Bulletin (SAB) 121.
This rule, introduced last year in the US, requires companies that custody customers’ cryptocurrencies to treat these digital assets as liabilities and maintain “corresponding assets” on their balance sheets.
Rule SAB 121 has been criticized for imposing harmful requirements on digital assets, according to a summary of the bill published by the Committee. Lawmakers argue that this rule represents an excess of regulatory authority on the part of the SEC. The central argument is that the SEC is unfairly restricting the ability of cryptocurrency custody companies to operate efficiently.
Biden’s veto and action by lawmakers
Recently, the House and Senate passed a bill to eliminate the SEC rule, with bipartisan support in both houses. However, President Joe Biden vetoed the measure, as promised by his administration. In his notice to Congress, Biden defended the SEC’s judgment, claiming that rolling back SAB 121 could undermine the agency’s authority over broader accounting practices.
To bypass the presidential veto, US Republican lawmakers are using the spending bill as an alternative route. The proposal not only cuts the SEC’s funding, but also restricts its ability to implement and enforce SAB 121. The bill also limits the SEC’s enforcement actions related to digital asset transactions, except in cases of fraud and manipulation of market.
Additionally, the bill proposes $2 billion in funding for the SEC. That amount represents nearly $590 million less than the agency’s request for the next fiscal year. However, the SEC had asked for $2.6 billion, citing the need for oversight of about 40,000 entities. Additionally, the SEC highlighted the importance of addressing critical risks associated with the digital asset industry.
In addition to the budget cut, the bill also restricts the SEC’s ability to police the crypto market until the agency clarifies which digital assets are considered securities or until new authorities are granted. This move aims to moderate the approach considered “aggressive” by the SEC Division of Enforcement.
Future of cryptocurrencies and regulation in the US
The budget proposal remains under negotiation in the Democratic-controlled Senate before becoming law. Rep. Tom Cole (R-OK), chairman of the Appropriations Committee, said the bill “provides sensible cuts to federal financial and consumer protection agencies.” Also according to Cole, the project prohibits funding for regulatory policies that he considers exaggerated and harmful.
The debate surrounding cryptocurrency regulation in the US reflects a significant divide between the approaches of Congress and the Biden administration. While the SEC and the administration advocate strict oversight to protect consumers and financial stability, many lawmakers, especially Republicans, argue that current rules are excessive and stifle innovation in the cryptocurrency sector.
Source: https://www.criptofacil.com/legisladores-buscam-contornar-veto-anticripto-de-biden/
