Introduction

Just when you thought things couldn’t get spicier in the world of regulations, a new twist in the plot appears! A House resolution aimed at reversing a contentious SEC rule is likely to make it through the Senate, according to well-placed sources. Yes, folks, it’s that time when the legislators trade their suits for their metaphorical boxing gloves, and crypto enthusiasts hold their breath in anticipation. Let’s dive into the juicy details, shall we?

House Resolution Overview

The main character of our drama today is none other than the House resolution poised to revoke the U.S. Securities and Exchange Commission's Staff Accounting Bulletin 121 (SAB 121). For those who may not have caught this episode yet, SAB 121 was meant to clarify how companies should handle crypto assets, suggesting (or rather insisting) they should keep these assets on their balance sheets. However, this seemingly innocuous guidance spiraled into a digital debate as critics quickly labeled it a party-killer for big custodians and companies holding crypto for customers. They argue it practically shouts, "Stay away from crypto!" Businesses, suddenly burdened with this new responsibility, are not having a gala time either. Oh, the drama!

Senate Vote and Expectations

Upcoming Senate Vote

The Senate floor is prepped, the stage is set, and multiple sources are gearing up for an intense showdown on Thursday morning. Cue the suspenseful music! The resolution has an optimistic air about it, with many expecting a swift passage. It’s like waiting for the final touchdown in a championship game. Our insider from the Senate chimed in confidently about its imminent success, even suggesting some Democratic senators might cross the aisle for it. Who knew politics could be so unpredictable?

Comments from Sources

Ron Hammond, the man in the know from the Blockchain Association, seems quite chipper about the bipartisan backing for this resolution. He’s eyeing a broader coalition and trying to warm up Uncle Joe’s (President Biden's, for the uninitiated) cold feet that have been hinting at a veto. Hammond nudges that reconsideration of the veto could rescue us from the 'heinous, anti-crypto doom' the SEC's rule is claimed to harbor. Meanwhile, Representative Mike Flood, the stalwart sponsor of the resolution, is standing tall amidst cheers. He’s throwing out confident vibes and believes this move has finally got the SEC sitting up straight and paying attention to Congress’s serious stance on crypto.

Last week's developments heightened the buzz, with bipartisan sparks flying in the House. The motion swept past with a resounding affirmation, placing it squarely in the Senate's lap. The White House, however, wasn’t exactly throwing a party. A stern warning hung in the air, promising a veto should the resolution pass the Senate. The plot thickens as the White House argues that overturning SAB 121 would stymie the SEC’s mission to set proper guardrails and address financial stability. Can you hear the echoes of political drama?

So, there you have it, folks! A House resolution that's literally making headlines and making waves. Pull up a chair, grab some popcorn, and stay tuned as this regulatory thriller unfolds on the Senate floor. Will the resolution pass? Will it face a veto? Only time (and a few more political twists) will tell!

Details of SEC Rule SAB 121

Alright, let's talk about the financial elephant in the room: the U.S. Securities and Exchange Commission's (SEC) Staff Accounting Bulletin 121, or as the cool kids call it, SAB 121. This rule was rolled out to guide businesses on how to account for crypto assets. Sounds straightforward, right? Not so fast. The rule stipulates that companies should hold these assets on their own balance sheets. In theory, it’s like saying, “Hey, if you’re gonna be in the crypto game, show your cards.” But not everyone’s a fan.

Uncle SAM, not to be confused with Uncle Sam, wants businesses to be transparent about their crypto holdings. However, this rule has stirred the pot, and critics argue it throws a wrench in the works for major custodians and companies considering holding crypto assets for customers. It's all about accountability, but not everyone agrees on how to account for it. SAB 121 aims to avoid Rocky Mountains of risks in the volatile world of crypto, but for many, it’s seen as a hill too steep to climb.

Purpose of SAB 121

SAB 121 was conceived with good intentions. Think of it as a financial babysitter, ensuring that businesses are on the up-and-up when it comes to their crypto dealings. By requiring companies to hold these assets on their balance sheets, the SEC hopes to foster greater transparency. Essentially, it's a move to keep shady dealings at bay and bring some order to the often chaotic world of crypto assets. No more hiding behind vague statements or off-the-books assets. It’s about as straightforward as a government policy can get.

The goal here is to provide clear guidance for an emerging sector that’s often as clear as mud. The SEC is looking to set some ground rules, to make sure everyone’s playing the same game by the same rules. With SAB 121, they’re saying, ‘Let’s see those coins, folks!' Greater accountability leads to improved market stability. And that’s the dream, right?

Criticism and Impact

But, as with all dreams, reality can be a bit of a dream-smasher. Critics of SAB 121 argue that the rule could discourage custodians and companies from entering the crypto space at all. Who wants the added hassle of stringent reporting requirements, akin to trying to solve a Rubik’s cube blindfolded? The SEC's well-intentioned move could inadvertently stifle growth and innovation in a rapidly evolving sector.

Moreover, the rule is seen by some as a one-size-fits-all approach in a tailor-made industry. Different companies have different needs and capabilities. What works for one might spell financial disaster for another. By shoehorning everyone into the same reporting framework, the SEC might be creating more problems than it's solving.

House Actions

The U.S. House of Representatives, never a group to shy away from a good brawl, voted to advance a resolution to overturn SAB 121. Representatives on both sides of the aisle have raised their hands (and voices) to signal their discontent with the rule. The House resolution, which passed last week, effectively throws SAB 121 back in the SEC’s face with a hearty "thanks, but no thanks." If this resolution makes it through the Senate and gets a nod from President Joe Biden, it'll be back to the drawing board for the SEC.

Bipartisan support is a rare bird these days, like spotting a unicorn in the wild. But in this case, both Democrats and Republicans found common ground in their opposition to SAB 121. The message to the SEC is loud and clear: “We’re not having it.” For the legislators leading the charge, this is more than just a policy dispute. It’s a statement of intent: they’re serious about reining in what they see as overreach by the SEC.

Potential Presidential Veto

White House Statement

Now, here comes the plot twist: the White House has threatened a veto. Just when you thought it was safe to go back in the political waters! The White House argues that SAB 121 reflects the considered view of seasoned SEC staff and is essential to maintain appropriate guardrails in the tumultuous world of crypto assets. According to their veto notice, scrapping SAB 121 could handcuff the SEC and potentially jeopardize financial stability in the future. It’s like taking away the referee’s whistle and expecting a fair game.

The White House’s stance boils down to this: don’t mess with the SEC’s ability to do its job. They see SAB 121 as a necessary evil, a bitter pill that, while tough to swallow, provides long-term benefits by stabilizing the volatile crypto market. The message: stay in your lane, lawmakers, and let the experts handle this one.

House and Senate Support

Despite the looming threat of a presidential veto, support for the resolution remains strong. Over 21 House Democrats joined the vast majority of Republicans to push the resolution forward. Senators are also warming up to the idea, with some Democrats likely to join their Republican colleagues in backing the resolution. This rare display of unity signals the widespread unease with SAB 121 among lawmakers, cutting across usual party lines.

Ron Hammond, the director of government relations with the Blockchain Association, noted that bipartisan support is expected to continue in the Senate. This reflects a broader recognition that the rule might be causing more harm than good. However, the specter of a presidential veto still hangs over the resolution, casting a shadow on its prospects. Yet, the momentum built in both houses of Congress is undeniable, pushing forward with the hope that the veto might be reconsidered, striking down what many see as a harmful, anti-crypto provision.

Statements from Stakeholders

Rep. Mike Flood

Rep. Mike Flood, the mastermind behind the House resolution aiming to buzz the SEC's controversial Staff Accounting Bulletin (SAB) 121, is positively beaming with confidence. According to Mr. Flood, "We’re hopeful that it passes the Senate this week, and I think it’s getting the SEC’s attention that we’re serious." Now, that’s the kind of optimism you'd expect from someone who’s been tirelessly championing the cause in the legislative corridors! The crux of Flood's argument is that the bulletin essentially scares off major custodians and companies from handling crypto for customers. He’s of the belief that, in his own words, this has been a "talk of the town" issue, and finally, the lawmakers are paying heed to it. As this bill inches closer to Senate approval, one can't help but sense the excitement in Flood's camp. Of course, with the White House waving around a dreaded veto threat like a lightsaber, the journey isn't all rainbows and unicorns. But hey, what’s a good story without some dramatic tension, right?

Blockchain Association

The Blockchain Association, the unofficial cheerleading squad for all things blockchain and crypto, wasn’t going to miss out on the fun, now were they? Ron Hammond, the director of government relations (a fancy title for the guy who knows all the movers and shakers in Washington), didn’t mince words. "We expect bipartisan support for the resolution," proclaimed Hammond with the confidence of a seasoned poker player holding a royal flush. Yet, amid all the chest-thumping, there’s a literary "but" – the presidential veto peril looms large. It’s like trying to enjoy a sunny picnic while knowing there's a chance of rain. "We encourage the veto to be reconsidered," said Hammond, probably imagining a scenario where the White House has an epiphany and realizes the SEC’s guidance is more harmful than helpful. The Blockchain Association strongly believes the SAB 121 is an "anti-crypto provision" tailor-made to stifle innovation and progress. In case you’re wondering, for the Blockchain Association, that’s the equivalence of a four-letter word. They’d rather see it get struck down faster than you can say “decentralized finance".