Introduction

Buckle up, folks! The US Senate is gearing up for a vote that could shake things up more than your morning espresso. We're diving into Joint Resolution 109, targeting none other than the infamous SAB 121. Sources close to Capitol Hill are buzzing with predictions that the Senate might just overturn it. But why should you care? Well, this isn't just your run-of-the-mill bureaucratic mumbo-jumbo—this has major implications for the world of digital assets. So, grab your popcorn; it's about to get interesting!

Vote on Joint Resolution 109

The Senate will be voting on Joint Resolution 109 this Thursday, and rumors on the Hill indicate bipartisan vibes. The resolution, which breezed through the House last week, calls for the invalidation of the SEC's controversial Staff Accounting Bulletin (SAB) 121. While Republicans dominate the House, a handful of Democrats jumped on board to support the resolution. Now, for it to pass in the Senate, it’ll need a couple of Democrats to join forces with all the Republican Senators. No pressure, right?

Word is, multiple Democratic senators are planning to vote in favor of the resolution. Senator Kirsten Gillibrand, known for her advocacy of all things crypto, has publicly stated her support, criticizing the rule for skipping the proper channels of consultation. According to Gillibrand, SAB 121 throws a wrench into established accounting standards, limiting options for consumers and turning otherwise safe digital assets into potential bankruptcy bait. Ouch!

Background on SAB 121

Purpose of SAB 121

So what's the big deal about SAB 121? Introduced in March 2022 and kicking off the following month, this bullet-pointed monstrosity insists that digital asset custodians report a liability, along with "corresponding assets," on their balance sheets for all custodied cryptocurrencies. According to the SEC, this rule aims to mitigate the "significant risks and uncertainties associated with safeguarding crypto assets." In other words, it’s like asking someone to wear a life jacket while swimming in the kiddie pool—better safe than sorry, right?

On paper, it sounds like a solid plan to protect consumers. However, as with most well-intentioned ideas, the devil’s in the details. Critics argue that this approach forces financial institutions to account for their customers’ digital assets as if they were their own, creating a confusing financial landscape and potentially reducing consumer protection during bankruptcies. And let’s be real, no one likes accounting kerfuffles.

Implementation and Controversy

You'd think the SEC had put out a best-selling novel with all the drama surrounding SAB 121. Skipping over the usual "public comment" period that typical agency rules go through, it appeared without much warning—like an unexpected plot twist in a mediocre crime thriller. The SEC justified the move by citing precedent from US bankruptcy courts, claiming it was merely a staff accounting bulletin, nothing to fret over. But try telling that to the financial institutions suddenly grappling with new liabilities.

Among its staunchest opponents are Senators like Gillibrand, along with House Democrats like Ritchie Torres and Wiley Nickel. They argue that the rule was rushed and lacks the necessary consultation with regulatory bodies and Congress. Nickel even penned a letter to SEC Chair Gary Gensler, urging him to pull the plug on SAB 121 before Thursday's vote. The White House, meanwhile, has thrown its hat into the ring, with a presidential veto looming if the resolution makes it to Joe Biden's desk. So, stay tuned; this rollercoaster ride is far from over!

Democratic support and key figures

Alright folks, here's the scoop that's got everyone in the Capitol buzzing: the Senate is gearing up for a crucial vote on Joint Resolution 109 this Thursday. What's the big deal, you ask? Well, this resolution aims to overturn the SEC's much-debated Staff Accounting Bulletin (SAB) 121, which affects how digital asset custodians report their assets and liabilities. And what's really juicy is that sources close to the Hill are saying this resolution might just get enough Democratic backing to pass. Yes, you heard that right, multiple Democratic senators are reportedly planning to vote in favor. Even longtime crypto-enthusiast Sen. Kirsten Gillibrand is throwing her hat in the ring! Stay tuned, because this vote could significantly change the crypto landscape and leave both consumers and custodians with a bit more clarity and protection.

Statements from key individuals

Sen. Kirsten Gillibrand

First up, we have the ever-vocal Sen. Kirsten Gillibrand from New York. And let me tell you, she's not holding back. Gillibrand has always been a staunch advocate for clarity in cryptocurrency regulations, and her stance on Joint Resolution 109 is no different. According to her, SAB 121 was a no-show in terms of proper consultation and failed to undergo a public comment period. "The rule was issued without proper consultation with the respective regulatory agencies or Congress and without going [through] a proper notice and comment period," Gillibrand said. It’s like inviting yourself to a party and not even bringing chips! She’s particularly peeved that SAB 121 forces financial institutions to treat their customers’ digital assets as their own, which could complicate things if these institutions hit the financial skids. Yeah, not a great look. Gillibrand stresses this could limit consumer options and reduce protections, which seems counterproductive to the whole point of regulations, right?

Rep. Wiley Nickel

Let's not forget about Rep. Wiley Nickel from North Carolina, who’s also got a bone to pick with the SEC's SAB 121. Nickel recently fired off a letter to SEC Chair Gary Gensler, urging the man to pull back this bulletin before the Senate vote on Thursday. Talking to Blockworks, Nickel didn’t mince words: "I’m just trying to make the point and the case to Gary Gensler and the SEC that they’re not serving President Biden’s interests by turning this issue into a partisan political football." Ouch, talk about a zinger. He’s hopeful that Gensler will hit the brakes on SAB 121 and try to hash out a bipartisan approach moving forward. As of mid-Wednesday, he hadn’t heard back from the SEC, but hey, fingers crossed!

SEC and White House response

Statements from SEC Chair Gary Gensler

Now, let’s shift gears to the SEC and what their top brass has to say. SEC Chair Gary Gensler has been quite the defender of SAB 121, and he’s sticking to his guns. In December, Gensler mentioned that this bulletin was "just a staff accounting bulletin" and consistent with existing precedents in United States bankruptcy courts. According to Gensler, SAB 121 is all about making sure liabilities are properly recorded on balance sheets. He pointed out that courts have frequently found that crypto assets aren't "bankruptcy remote," meaning they aren’t exactly safe from being nabbed during bankruptcy proceedings. So, in Gensler’s view, SAB 121 is just being cautious. Fair enough, but whether that caution is warranted or not seems to be the million-dollar question here.

White House position

And what about the big guy in the White House? Well, President Joe Biden isn't exactly rolling out the red carpet for Joint Resolution 109. In fact, the White House has already stated that if this legislation ends up on Biden's desk, he’s ready to veto it faster than you can say "filibuster." The administration appears to be standing behind the SEC and its efforts to put boundaries around those "significant risks and uncertainties" tied to crypto assets. Still, with significant bipartisan support, it remains to be seen how this will all play out and whether the resolution will have the staying power to make it to the President’s desk in the first place.

Senate predicted to overturn SAB 121 in vote Thursday, Hill sources say

Brace yourselves, folks! The US Senate is planning to vote on Joint Resolution 109 this Thursday, and it looks like there could be some serious fireworks. Sources buzzing around Capitol Hill seem to believe that there’s enough support to overturn the Security and Exchange Commission’s (SEC) controversial Staff Accounting Bulletin (SAB) 121. Yes, you heard that right – the tug-of-war between regulators and crypto enthusiasts is about to get another shake-up!

So, here’s the tea: SAB 121 mandates that digital asset custodians report liabilities and corresponding assets for all those fancy cryptocurrencies they're holding on behalf of their clients. This basically means financial institutions have to treat their customers’ digital dough as their own. The SEC's reasoning? To shield against the murky waters and risks engulfing the crypto asset world. But many in the Senate aren’t buying it.

In a surprising twist of bipartisan solidarity (cue gasp), the House of Representatives already pushed this resolution through. It even garnered support from 21 Democrats in a Republican-heavy House. For the Senate to give it a thumbs-up, all Republican Senators and at least two Democrats need to join forces. And guess what? Our insider sources say multiple Democratic Senators are game for this power play.

Sen. Kirsten Gillibrand is leading the charge

Enter Sen. Kirsten Gillibrand, the nyan-cat-loving, crypto-supporting Democrat from New York. She’s making it pretty clear that she'll be voting in favor of Joint Resolution 109. In her words, “The rule was issued without proper consultation with the respective regulatory agencies or Congress and without going [through] a proper notice and comment period.” Boom! Mic drop.

Gillibrand's critique doesn't stop there. She argues that SAB 121 twists the usual accounting norms, forcing financial spots to count their clients’ digital treasures as their own, which can seriously limit consumer choices. Remember when your mom told you not to put all your eggs in one basket? Well, this is like taking away everyone's baskets when you hit the grocery store. Not cool, SEC.

Not Gillibrand’s first rodeo

Gillibrand isn’t new to this dance. Last year, she teamed up with Sen. Cynthia Lummis and House Financial Services Committee Chair Patrick McHenry to give SAB 121 a thumbs down. They even dared the Federal Reserve and several other heavyweights to step in. While other Democrats stayed quiet as mice, folks like Reps. Ritchie Torres and Wiley Nickel (who doesn’t dig the SEC’s football tactics) signed on for the challenge.

Nickel is still making noise, shooting off a letter to SEC Chair Gary Gensler, practically begging him to ditch SAB 121 before Thursday’s big vote. Spoiler alert: It’s mid-afternoon Wednesday, and Nickel’s inbox isn’t pinging with a response.

Gensler's defense and the White House stance

And then there's Gary Gensler. Defending SAB 121 like a knight in shining armor (well, kinda), Gensler says this rule is consistent with what US bankruptcy courts have been chanting. He insists it just fixes the balance sheet mess while reminding everyone that crypto assets aren't bankruptcy-proof. Touché.

Meanwhile, over at the White House, they’re already sharpening their veto pencils. They’ve flat out said that if Joint Resolution 109 lands on President Biden’s desk, it’s getting the ax. Talk about a rollercoaster!

So there you have it. Thursday’s Senate vote could be a pivotal moment for the crypto world. Will they pull the plug on SAB 121, or will the SEC’s rule continue to rule the roost? Stay tuned, crypto enthusiasts. It’s all about to go down.