The United States House of Representatives convened to revoke a regulation detrimental to cryptocurrencies.
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Recently, there was an hour-long debate on House Joint Resolution 109 in the US House of Representatives. The Securities and Exchange Commission’s (SEC) Accounting Bulletin Statement (SAB) 121, a regulation with important ramifications for the banking and cryptocurrency industries, is intended to be repealed by the decision.
Banks must maintain an offset obligation, disclose all cryptocurrency holdings, and record customer cryptocurrency assets on their balance sheets in accordance with SAB 121. In other words, the bank needs to hold an equal amount of cryptocurrency for each dollar kept in escrow.
The Government Accountability Office (GAO) later adopted SAB 121 as a rule, after it had first been adopted as guidance. Banking regulators were divided over this decision, including Federal Reserve Chairman Jay Powell, who takes a different tack when it comes to cryptocurrency custody.
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Representatives Mike Flood, Wiley Nickel, and Cynthia Lummis introduced a Joint Resolution bill to repeal SAB 121 in response to the GAO’s ruling.
Democrats, led by Maxine Waters, have argued in favor of retaining the SAB 121 disclosure requirements while presenting a different bill to alter the process of cryptocurrency custody transactions. They contend that the SEC’s power and capacity to provide future guidance on cryptocurrencies would be weakened by the repeal of SAB 121.
President Biden has expressed his intention to veto the Joint Resolution if it reaches his desk, Maxine Waters announced, underscoring the administration’s resolve to maintain SAB 121.
Republicans contended that if the regulation isn’t changed, the US runs the risk of smuggling cryptocurrencies abroad, which was met with resistance from the majority of Democrats on the House Financial Services Committee. According to them, prudential banking regulators like the Federal Deposit Insurance Corporation (FDIC), Office of the Comptroller of the Currency (OCC), and Federal Deposit Insurance Division (FED) should make decisions on these issues rather than the SEC.
Concerns regarding the possibility of Bitcoin, the asset supporting Bitcoin ETFs, becoming centralized were raised by Representatives Flood and Nickel. They drew attention to the fact that big businesses like Bitwise, Fidelity, and BlackRock are unable to maintain custody with banks, which causes Coinbase to be highly centralized.
While the talks go on, everyone’s attention is focused on this weekend’s vote. The resolution is anticipated to encounter obstacles in the Senate even though it is likely to pass the House on a bipartisan basis. Furthermore, the White House has made it clear that it will veto any attempt to repeal SAB 121.
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