Is there still hope for overturning SAB 121? Biden's encryption policy stance may continue to loosen under pressure

On July 12, members of the U.S. House of Representatives voted on a resolution related to the cryptocurrency accounting bulletin SAB 121, but failed to overturn the previous veto of SAB 121 by U.S. President Biden.

But next, crypto-friendly lawmakers may continue their efforts to break the constraints of SAB 121 by passing a new bipartisan bill, the Uniform Treatment for Custodial Assets Act, which may also pass the U.S. House of Representatives Appropriations Committee, budgetary constraints on implementation of SAB 121. Meanwhile, an SEC source revealed that some companies and financial institutions have proposed business practices that have received approval from SEC staff that would exempt them from the controversial SAB 121.

In addition, Biden’s senior advisers recently participated in a cryptocurrency roundtable gathering with big names, releasing more positive signals.

The U.S. House of Representatives failed to stop Biden’s veto of SAB 121

On July 12, members of the U.S. House of Representatives voted on a resolution related to the Cryptocurrency Accounting Bulletin SAB 121, with a vote of 228 to 184. Because the vote failed to meet the two-thirds majority (290 votes) threshold, the SEC's audit guidance will remain in effect.

In the past year, SAB 121 (Staff Accounting Bulletin No. 121) required digital asset custodians to treat digital assets as liabilities and list them on the balance sheet at fair value. There is widespread concern in the cryptocurrency industry that it could prevent banks from custody of digital assets, excluding banks from the crypto market.

In February of this year, U.S. Congressman Mike Flood, a Republican from Nebraska, and Wiley Nickel, a Democrat from North Carolina, introduced a resolution to overturn the proclamation. Subsequently, the House of Representatives passed a measure to overturn SAB 121 in May this year by a vote of 228 to 182. Supporters of overturning the bill were mainly Republicans and 21 Democrats. A week later, the U.S. Senate passed a resolution to overturn SAB 121 by a vote of 60 to 38, with several Democrats including Senate Majority Leader Chuck Schumer also voting in favor.

But then, the resolution to overturn SAB 121 was vetoed by US President Biden.

The White House said in a policy statement in May: "The Administration strongly opposes the passage of H.J. Res. 109, which would disrupt the SEC's work to protect investors in the crypto asset market and safeguard the broader financial system." The SEC said SAB 121 is “Non-binding employee guidance” designed to enhance disclosures to investors.

Now, despite the House vote failing to override Biden’s veto, crypto-friendly lawmakers have not given up on their efforts and are already working on a plan B. Rep. Mike Flood, a Republican from Nebraska, said he hopes to pass "a regular piece of legislation" to overturn the SEC's guidance through a related bill and attach it to the must-pass legislative document, which would provide relief to Democrats. Pressure to openly contradict the president.

According to a Democratic staffer familiar with the thinking of House leaders, they had not expected how many Democrats would change their votes on July 10.

They believe in passing HR 5741, the Uniform Treatment for Custodial Assets Act, which was introduced by Mike Flood, the main legislative promoter mentioned above, and sponsored by French Hill, Wiley Nickel) and Ritchie Torres co-sponsored a bipartisan bill that would provide a better path to overturning SAB 121.

Republican Rep. Mike Flood, who supports overturning SAB 121, speaks before this House vote

In addition, the U.S. House Appropriations Committee also included a policy rider in its budget bill prohibiting the SEC from using related Grant funds to implement SAB 121. However, the bill must be approved by the Senate before it can take effect.

Allowing some companies to bypass SAB 121, may the SEC open a backdoor?

According to a report by Bloomberg Tax, an SEC source revealed that some companies and financial institutions have proposed business practices that have obtained the consent of SEC staff, making them exempt from the controversial SAB 121.

SAB 121 was released in March 2022. With some companies in the cryptocurrency industry frequently going bankrupt, some companies have been seeking advice from the SEC on how to develop new policies and procedures related to cryptocurrency, the source added , the legal guidance SAB 121 itself has not changed.

SAB 121 took into account some of the actual encryption industry conditions at the time. “In April 2022, there are still many unanswered questions about how these laws will be implemented, and we are seeing many cryptocurrency industry players not being careful enough in providing these services, hurting many customers,” the SEC source said .

The source added that now some companies have proven that certain procedures and technologies they have set up can allow customers to retrieve their cryptocurrencies in the event of bankruptcy just like other assets (such as US dollars), and therefore do not need to comply with SAB 121 obligation.

儘管如此，目前仍需要更多資訊和揭露，以確定哪些公司將有資格繞過SAB 121的約束，以及SEC對相關舉措的政策立場具體是什麼。

7月12日，預測市場Polymarket上，前總統川普獲勝的機率已達到60%

拜登高級顧問參加加密圓桌，傳遞關鍵訊號

就在兩天前（ 7月10日），拜登身邊的一名高級顧問Anita Dunn，以個人身份會見了數十位加密貨幣領域的領導者，這次圓桌會議由加密友好的加州民主黨眾議員Ro Khanna組織。參加Khanna組織的這次加密圓桌會議的，還有紐約州民主黨參議員Kirsten Gillibrand和科羅拉多州民主黨眾議員Joe Neguse，以及億萬富翁Mark Cuban，Cuban支持拜登連任但批評其政府對待加密貨幣的方式。

與會的多位嘉賓表示，這次會議“富有成效”，並讚揚加州的民主黨人安排了這次圓桌會議。

「我真的要非常讚揚Khanna議員，能夠把大約30位甚至更多的行業領導者聚集在一起，讓他們有機會直接與Dunn女士及其延伸至白宮的團隊進行交流，」加密貨幣交易所Coinbase的首席法律長Paul Grewal表示。

Grewal將這次會議描述為拜登政府扭轉對加密貨幣“幾乎一致的敵對態度”的“關鍵時刻”，與此同時，共和黨人和前總統川普正在支持加密行業。他表示：「我們正處於一個關鍵時刻，共和黨人完全擁抱加密貨幣，並在即將舉行的會議中以非常具體和明確的方式將其納入他們的黨綱中。因此，我認為現在的政府現在需要做出選擇。滿懷希望，並且更加堅定地倡導這項開創性技術改變許多系統的承諾。加密政策立場的時間已經不多了。

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