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In a significant move for the cryptocurrency market, the US Senate voted this Thursday (16) in favor of overturning the US Securities and Exchange Commission’s (SEC) controversial cryptocurrency policy, known as Staff Accounting Bulletin No. 121 (SAB 121).

The vote by deputies was overwhelming to end the SEC’s crypto policy with 60 senators voting to overturn the law and 38 in favor of maintaining it. This action follows in the footsteps of the House of Representatives, which also approved the resolution. However, the cryptocurrency industry may not be breathing a sigh of relief anytime soon. After all, President Joe Biden promised to veto the resolution.

Issued in 2022, SAB 121 states that any company that holds cryptocurrencies on behalf of clients must record these assets on its own balance sheet. This requirement could have significant implications for banks and other financial institutions that deal with cryptocurrencies, negatively impacting the capital of these entities.

Cryptocurrency Legislation in the US

The SEC’s policy received sharp criticism from Republican lawmakers, who argued that the SEC implemented the rule without following due regulatory process. The Government Accountability Office (GAO) agreed with this criticism, stating that the SEC failed to treat what was supposed to be a rule as simple staff guidance.

Surprisingly, a dozen Democratic senators joined the Republican majority to pass the resolution, easily surpassing the simple majority required. However, the resolution did not reach enough votes to become veto-proof.

Among supporters, Senate Majority Leader Chuck Schumer (DN.Y.) stood out in opposing the SEC’s crypto effort, challenging his own party’s position.

If the resolution is successful through the Congressional Review Act, the SEC would be prevented from pursuing similar policies in the future, limiting its ability to implement investor protection and financial stability rules related to cryptoassets.

White House alert

However, the White House warned that this “could inappropriately restrict the SEC’s ability to ensure appropriate protections and resolve future issues related to cryptoassets.”

The cryptocurrency industry has been closely following these developments. This is because this is the first time that Congress has addressed an issue focused directly on the sector.

While the enactment of a cryptocurrency tax provision was an important milestone in the past, the current resolution marks a direct effort by Congress to help the industry, even in the face of resistance from the Executive Branch.

The battle over SAB 121 highlights the ongoing tension between government regulation and the growing cryptocurrency industry. The decision by the Senate and House represents a significant effort to shape the regulatory future of cryptocurrencies in the US, while the threat of a presidential veto keeps the sector in a state of uncertainty.

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