Congressmen Discuss House Vote To Reverse SEC Policy On Crypto Custody

Yesterday, the House of Representatives voted to pass House Joint Resolution 109 (H.J.Res. 109) that included 207 Republicans and 21 Democrats voting yes and 182 Democrats voting no. H.J.R. 109 would overturn an SEC accounting policy known as Staff Accounting Bulletin (SAB) 121 that many experts consider as having a deleterious effect on the willingness of banks to custody digital assets. Despite the White House issuing a policy statement stating that if H.J.R. 109 was presented to the President, he would veto it, an astonishing 21 Democrats still broke ranks to join with Republicans to pass the resolution and send it to the Senate for consideration.

I spoke with Representatives Mike Flood (R-NEB) and Wiley Nickel (D-N.C.), the co-sponsors of H.J.Res. 109, about the debate in the House yesterday, conversations with Nickel’s Democratic colleagues who publicly voted no on his measure but privately shared they felt conflicted about whether SAB 121 is the right policy for digital assets, and a message to the cryptocurrency industry to not leave the U.S. and give Congress a chance to get the policy right on digital assets.

Flood said a colleague told him this was the first time that digital assets and cryptocurrency has had a vote on the House floor in Congress. The debate on the floor was much broader than just the reversal of SAB 121, but on the SEC’s approach to digital assets. “The SEC claims they are protecting consumers, but the policy allows only unregulated non-banks to custody digital assets…The U.S. Congress is moving in a direction that the SEC isn’t,” said Flood..com/

On reading President Biden’s policy message threatening a veto, Flood commented, “When I read the President’s veto message, I thought he [Biden] is out of sync with the rest of America and doesn’t understand the risk of leaving banks out from custody of cryptocurrency.”

“I’m encouraged that 21 Democrats stood with us on this issue. That was a big win for us and always a good feeling,” said Nickel. On his discussions with other Democrats about the bipartisan resolution, Nickel commented, “Many of my Democratic colleagues said to me that they believe this is a place where the administration is wrong on policy. However, it’s difficult for Democrats to vote for a Congressional Review Act (CRA) against the current Administration”. The CRA is the law utilized in H.J.Res. 109 that permits Congress to overturn a specific agency’s rule.