Does the SAB 121 Vote Mean Anything for Future Crypto Legislation?

As a crypto investor, I’d like to emphasize that the opinions expressed below are my own and do not necessarily represent those of CoinDesk or any affiliated entities. This is an extract from The Node, our daily newsletter that gathers the most significant crypto news from CoinDesk and beyond. You can subscribe here to receive the full edition in your inbox each day.

Despite Senator Schumer and other high-profile Democrats’ efforts to overturn it, the legislative measure has reached President Joseph Biden’s desk. Biden has pledged to veto this bill in support of the Securities and Exchange Commission (SEC). Unfortunately, Thursday’s Senate vote with a count of 60 to 38 fell short of the necessary votes needed to override a presidential veto.

Interpreting the intentions of legislators regarding crypto regulations is proving to be a challenging task, as there are signs of potential shifts in positions among those open to passing decent legislation or even repealing existing problematic ones. However, it’s essential to consider that several compelling reasons exist for abandoning SAB 121. For instance, the nonpartisan Government Accountability Office reported that the SEC bypassed proper congressional oversight during its implementation.

As a crypto investor, I’ve observed Senator Elizabeth Warren’s consistent skepticism towards cryptocurrencies. Her recent vote to uphold SAB 121, which requires companies to disclose their crypto-related risks in financial statements, was anticipated. She argued that the inherent volatility and unique risks of crypto can significantly impact a company’s financial health.

Views are split:

“James Wester, the crypto and co-head of payments at Javelin, expressed his viewpoint during an interview on X that even if D does not withdraw the crypto accounting rule, a veto from the White House is still likely. He hypothesized that Democrats may have cast ‘yes’ votes on the anti-SBA 121 bill in anticipation of this outcome. In simpler terms, it seems that they took this action because they believed the White House would ultimately reject it.”

During a recent statement, Associate Professor Austin Campbell from Columbia Business School expressed his viewpoint that the bipartisan support for Thursday’s crypto-related vote underscores its nonpartisan nature in the United States. He emphasized, “This is an American concern, not a matter of political affiliation.”

See also: Will Biden Get the Final Say Over a Controversial Crypto Rule? | Opinion

As a crypto investor, I can’t help but express concern over the unstable nature of cryptocurrency legislation. The recent rule that requires a two-thirds majority approval, which has faced intense criticism from industry players and has even been labeled “idiotic” by respected figures like Nadine Chakar – a finance industry pioneer who co-founded State Street Digital and now heads DTCC’s crypto division, and is set to speak at Consensus 2024 – will most likely persist.

The SAB 121, though labeled as nonbinding, is significantly impacting financial institutions’ capability to engage in the crypto custody business, as stated in a joint open letter from the Bank Policy Institute (BPI), American Bankers Association (ABA), Financial Services Forum (FSF), and Securities Industry and Financial Markets Association (SIFMA) in February.

See also: Crypto Industry Rallies Behind U.S. House Bill As it Heads to Final Vote

If regulations for sectors like stablecoins and interbank blockchain rails had been established years ago, how far along would they be now? It’s an intriguing question with a likely answer that these areas would have made significant progress. The regulatory uncertainty, and more recently, the hostile stance towards crypto, has impeded companies from exploring the full potential of cryptocurrencies. For instance, major custodians, such as those mentioned by Jeff John Roberts in Fortune, would likely be actively involved in holding ETF-backed bitcoin if a clear regulatory framework existed.

Twelve Democratic senators joined forces to block a detrimental rule, which is an intriguing turn of events. However, I’m not entirely optimistic about the significance of the SAB 121 situation.