Senate Passes Bill Rescinding SEC’s Crypto Custody Rule, The President’s Desk Is Next

rescinding SAB 121 – passage

The Senate passed Rep. Mike Flood’s (R, NE) House Joint Resolution 109 rescinding the SEC’s Staff Accounting Bulletin 121, which effectively forbids the regulated financial system from offering custody products for digital assets. The final Senate vote was 60-38.

See the voting record on

As expected, the long-dormant Democratic “pro-crypto” support in the Senate came out of the woodwork to join all of the Senate’s voting Republicans. Among the 12 Democrats who voted for the resolution – and snubbed the threat of President Joe Biden’s veto – Senate Majority Leader Chuck Schumer (NY), Senate Finance Chair Ron Wyden (D, OH) and Sen. Kirsten Gillibrand (D, NY).

Notable among Democrats who voted “no” was Senate Agriculture Chair Debbie Stabenow (D, MI), who led the charge on the Digital Commodity Consumer Protection Act (DCCPA) prior to the implosion of FTX. That didn’t stop fellow Michigander and Democrat Sen. Gary Peters from voting “yes” on the resolution.

Sens. Robert Menendez (D, NJ) and Josh Hawley (R, MO) did not vote.

more tips:

    • U.S. Senate Votes to Kill SEC’s Crypto Accounting Policy, Testing Biden’s Veto Threat – CoinDesk

what you should know: Schumer and Wyden’s “yes” votes are the most telling within the Democratic caucus. As leaders in the Democratic Party, the two Senators are telling Democratic leadership – which starts in the White House – that they’re wrong.

This May 10 tweet from Messari’s Ryan Selkis was an indication on how yesterday’s vote would go: Schumer and Wyden aren’t buying at least some of Dem leadership’s strategy towards digital assets.

rescinding SAB 121 – reaction

Congressional Republicans took a victory lap once the Senate vote on rescinding SAB 121 was completed.

House Joint Resolution 109 sponsor Rep. Mike Flood (R, NE) said on X after the vote, “This is a landmark result for digital asset regulation. Both the House and Senate – including Majority Leader Schumer in the Senate – have delivered a clear, bipartisan message to the SEC that SAB 121 needs to go. It is clear there is overwhelming opposition to SAB 121, and I urge [POTUS] to reconsider his previous statement of intent to veto the resolution.” He urged President Biden to sign the resolution. Read his thread.

House Majority Whip Tom Emmer (R,  MN) challenged the President on X, “Crypto is in the middle of a policy tug-of-war between the Administrative State and the American people. Congress just passed the SAB 121 repeal on a bipartisan basis. If Biden vetoes, it proves he wants to kill opportunities for Americans at the expense of Americans.”

Senator Cynthia Lummis (R, WY), the Senate sponsor of the resolution, said on X, “The Senate passing a CRA overturning SAB 121 is a win for financial innovation and a clear rebuke of the way the Biden admin and Gary Gensler have persecuted crypto. It also marks the 1st time Congress has passed standalone crypto legislation. We are just getting started.”

View her remarks on the Senate floor, too.

The only Democrat to speak immediately after the bill’s passage in the Senate was the resolution’s co-sponsor Rep. Wiley Nickel (NC). A day prior in a letter, Nickel had urged SEC Chair Gary Gensler to withdraw SAB 121. Yesterday, Nickel wasn’t backing off his request and said in a statement, “We never should’ve had to resort to using a CRA to fix this issue, but unfortunately, it’s the only tool we have left as the SEC continues to turn cryptocurrency regulation into a political football. I once again call on Chair Gensler to withdraw SAB 121 before President Biden is forced to choose sides on an issue that matters to many Americans.”

rescinding SAB 121 – next

what you should know: The ball is in the President’s court. A veto seems like an overly strong statement on something so simple – let the regulated banks do crypto custody. There is, in theory, no better option and if you’re the Party of consumer protections, why wouldn’t you? To which the President might say, “We don’t want crypto to get a foothold in the financial system.”

Most likely, Biden vetos: The Warren faction owns the controls of the Biden Administration on this issue.  The White House will risk this becoming an issue in the general election. If number goes way up on, say, the price of Bitcoin (like +100k), voter interest could turn the tide as Republicans raise up the issue. The result could be Chair Gensler withdrawing the Bulletin.

Treasury publishes strategy

The Treasury Department announced the publication of the “2024 National Strategy for Combatting Terrorist and Other Illicit Financing (2024 Strategy)” yesterday.

Get yesterday’s report (PDF).

Page 41 of the report provides a comprehensive list of updates the Treasury department has undertaken as it relates to virtual assets in the past few years such as its responses (here and here) to President Biden’s March 2022 Executive Order on digital assets.

According to Treasury, yesterday’s report also includes the “key risks” previously identified in February’s “2024 National Money Laundering, Terrorist Financing, and Proliferation Financing Risk Assessments.”

blockchain bills update

Correction from yesterday… Two of the blockchain bills we discussed yesterday moved beyond voice vote and made it to a roll call vote.

The two bills are:

Rep. Bucshon’s (R, IN) “Promoting Resilient Supply Chains Act” [H.R.6571] passed with a vote of 390-19. 18 of the 19 “no” votes were Republican. See the roll call on the Clerk’s website.

And, Rep. Bucshon’s “Deploying American Blockchains Act” [H.R.6572] passed with a vote 334-79. 35 of the 79 “no” votes were Republican. See the roll call on the Clerk’s website.

what you should know: For two bills that came out of the Republican-controlled House Energy & Commerce Committee with unanimous bipartisan support, that’s a striking number of Members voting against the bills.

So what happened…

First, the House “Freedom Caucus” was voting “no” on a series of bills in which the blockchain bills got caught up in. Nevertheless, House Republican leadership voted “for” the bills.

As for the Democrats, Rep. Maxine Waters (D, CA), who is House Financial Services Ranking Member, let it be known among her Democratic colleagues that she was against the “Deploying American Blockchains Act.” In response, House E&C Commerce Ranking Member Frank Pallone (D, NJ) and the bill’s co-sponsor, Rep. Lisa Blunt-Rochester (D, DE), pushed back.

still more tips

Oklahoma Passes Landmark Bill Protecting Bitcoin Rights – Forbes

Futures exchange CME plans to launch bitcoin trading – Financial Times

Georgetown Law professor Christopher Brummer is leaping into crypto disclosure services as CEO of the new company, backed by Robinhood and a former PayPal chief – CoinDesk

BlackRock’s Bitcoin fund blows away another ETF record with ‘mind-boggling’ number of holders – DL News

China busts $1.9 billion underground banking operation using USDT stablecoin – The Block