Washington is getting ready for a major showdown over a contentious SEC decision.The House of Representatives’ vote last week to abolish Staff Accounting Bulletin (SAB) 121 was a major step forward.

• SAB 121: What is it?
  
• The founder of a consulting firm blames SAB 121 for the FTX 
• Debacle, calling the SEC’s response “insane.”

Public businesses must account for and disclose the risks and responsibilities of protecting their clients’ cryptocurrency holdings in accordance with SAB 121. Because it could make financial reporting more difficult and increase operational burdens, the policy is divisive.Since their implementation in 2022, these regulations have come under heavy fire from both the banking sector, which feels that they have effectively prevented them from providing services related to digital assets, and the cryptocurrency community as a whole.

Despite the US Senate’s vote on May 16 to repeal the SEC recommendations, opponents of SAB 121 are still very much in the game.

The President must still sign off on the Senate decision. But President Joe Biden has stated that he is willing to veto the resolution to completely repeal SAB 121. An assertion made by the White

Rather than waiting for Congress to take action, several Democratic lawmakers have been pressuring SEC head Gary Gensler to take SAB 121 off his own initiative.Among them is Congressman Wiley Nickel, the 13th District representative for North Carolina, who expressed confidence in the Senate’s passage of Joint Resolution 109.

According to Nickel, eliminating SAB 121 would improve investor protection and guarantee American competitiveness internationally. Banks that have a proven track record of delivering fiat custody services could expand to include cryptocurrency. Some have claimed that SAB 121 was ineffectual since cryptocurrency initiatives like Voyager and Celsius failed to safeguard their clients’ assets even after it was put into action.

The public animosity displayed by the SEC toward the digital assets sector is detrimental to President Biden’s goals. The SEC is pushing President Biden to take a stance on a topic that is important to a large number of Americans by using bitcoin regulation as a political football.Wiley Nickel, a congressman

Because of SAB 121, which Nickel described as a “prohibitively expensive regulatory burden,” American consumers are forced to rely on “riskier offshore custody solutions.”

Nickel continued by calling the SEC’s approach to digital assets “misguided” and bringing out issues with the way SAB 121 was being implemented. He said that the way staff accounting bulletins were used constituted a “breach of the rulemaking process,” despite the fact that they are typically intended to serve as guides on best practices.

“There is a good chance that this rule contributed to the FTX because, in the absence of it, there could have been regulated custodians servicing exchanges and customers in the United States, which would have stopped theft and self-dealing.”Austin Campbell

He continued by cautioning that the reason big banks detest SAB 121 so much is that it keeps them out of the expanding market for exchange-traded funds that are based on the spot price of Bitcoin.Charles Hoskinson, the founder of Cardano, has also expressed strong disapproval of Biden’s position on digital assets, alleging that his government has been working to kill the American cryptocurrency industry.

He continued by saying that the SEC should not be regulating cryptocurrency using laws that date back 90 years, and that the stringent regulations have already driven many reputable exchanges and trading platforms to relocate, boosting the economies of competing states by generating jobs and tax income.This story is far from done, as a veto is imminent. It will be interesting to watch how Capitol Hill lawmakers respond, as well as executives in the TradFi and cryptocurrency industries.