5 Things To Know About Upcoming SAB 121 Bill Vote

The crypto market has recently faced a crash, and the trouble might double based on the voting results on the SAB 121 Bill. This bill was quite controversial among crypto investors and the platforms, leading to discussions over an alternative, but the sudden complication has pushed it back to the starting position. With politicians like Donald Trump and Biden divided on the acceptance and regulation of cryptocurrency, the SAB 121 Bill opened new dynamics.

1. What Is the SAB 121 Bill?

SAB 121 Bill stands for the Staff Accounting Bulleting 121 Bill, introduced by the Securities and Exchange Commission (SEC). It was issued on March 31, 2022, and has been in the act for two years now before the U.S. House of Representatives momentarily approved H.J. Res. 109 to overturn.

As per the SAB 121 Bill, the crypto companies are mandated to record the customer’s crypto holding on their balance sheet as liabilities. The SEC has introduced it as a significant measure to guard against the risks and uncertainties that come with crypto holdings.

2. House and Senate Came Together On The SAB 121 Bill

Earlier in May, the full House and Senate gathered to vote on the H.J. Res. 109 to discontinue the SAB 121 Bill and favored the other with a majority. Initially, the house voted 228-182, with 228 in favor, in which the majority was the Republicans and 21 Democrats. By the next week, the Senate votes were also out, where 60 voted in favor and 38 rejected. A few democrats like Senate Majority Leader Chuck Schumer, Senate Majority, and others were also in favor.

However, a Veto overruled everything, which also questions how the crypto regulations will look in the future when Bill fails to obtain superiority here.

3. The Veto Dilemma

The current US President Biden has vetoed the H.J. Res. 109 and has favored the SAB 121 bill. The bill is now back to the congress for the revaluation and new voting by the representatives. Though the SAB 121 bill is active till January next year, the rescinding of the bill is only possible if the new voting gets ⅔ majority in favor by both Congress. Only then, it can 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 harness the potential benefits and opportunities of crypto-asset innovation, says Biden

4. SEC’s Debate Over Transparency

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

The new bill will limit the involvement of the SEC in regulations. However, the President has also stated 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 substantial financial instability and market uncertainty.”

An SEC spokesperson has earlier cleared that they have seen multiple crypto firms fail and the investors lining the bankruptcy courts with hopes of their investment returns. He added that they have also seen the risk on the investors with these firms, which promise to safeguard their assets while hiding them off the balance sheet.

The supporters object to the SEC’s take on this as no other financial asset is treated this way and has not gotten any higher stability as the frauds and scams with crypto are also happening with stocks, bonds, and even gold.

5. The SAB 121 Bill Might Have Compromised Security

More than 20% of Americans actively invest in cryptocurrency and require satisfactory regulation favoring the investors, not only the Government. The SAB 121 bill is not only unliked by the private companies, but the banking sectors have also shown disagreement as it restricts them from offering crypto custody. The dismissal of this rule could bring opportunities for better adoption and participation by the people in this industry.

The Bank Policy Institute, American Bankers Association, and many others collectively wrote a letter to the SEC’s chairman, Gary Gensler, on modifying the SAB 121 Bill, explaining how precluding the Banks from offering crypto custody has pushed investors toward the public companies which are affecting the safety and stability of the assets as these lack regulatory oversight.

On the contrary, many believe that the SAB 121 Bill is the way for clarity and security as it will address very important issues like security, taxation, and market stability. Additionally, they believe it will offer higher stability for top cryptocurrencies like Bitcoin and Ethereum.

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