The vote to approve a resolution that would repeal the SEC’s cumbersome rules on digital asset custody, imposed in Special Accounting Bulletin No. 121, closed Thursday with 60 votes in favor.
U.S. lawmakers gave the majority vote to House Bill HJRes.109, proposed by Representative Mike Flood, to repeal SEC Regulation SAB 121, which is considered a major barrier preventing the country's banks from holding cryptocurrencies and digital assets.
While Special Accounting Bulletin No. 121 does not directly prevent commercial banks from offering crypto-asset custody services to their clients, it does impose overly strict requirements that limit and make it almost impossible for any regulated bank in the country to engage in this activity.
The bill HJRes.109 It was presented as a solution to this problem, with the idea of putting an end to the rigorous regulatory requirements and controls that the SEC has established for the custody of cryptocurrencies and digital assets by banks and financial companies regulated in the United States.
60 votes for and 38 against
As mentioned above, the bill HJRes.109 was approved by US lawmakers in the Senate vote on Thursday. The vote exposes that lawmakers are in favor of banks holding custody of cryptocurrencies without having to maintain a fair value liability for the crypto assets they hold in custody, as set out in SAB 121.
Cynthia Lummis, U.S. Senator from Wyoming, said that the SEC's SAB 121 is a controversial rule that stifles technological innovation, and that the bill HJRes.109, which repeals the rule, represents a victory for cryptocurrency financial innovation in the nation.
“It also marks the first time Congress has passed standalone cryptocurrency legislation,” the senator commented on Platform X.
Why is HJRes.109 important?
On the banking side, HJRes.109 is of utmost importance because it would allow traditional financial institutions to offer crypto-asset custody services to their clients, potentially unlocking new opportunities in the crypto market, while reducing the concentration of custody services on centralized exchanges.
HJRes.109 makes cryptocurrency custody by commercial banks viable by eliminating onerous capital requirements imposed by the SEC, which force banks that want to hold cryptocurrency to report assets in custody on their balance sheets as liabilities and to hold $XNUMX in reserve for every $XNUMX worth of crypto assets held in custody.
On the cryptocurrency side, the aforementioned bill increases protections for investors and users of these digital assets, allowing regulated entities to participate in the custody of crypto assets, while encouraging the diversification of these services.
The U.S. House Financial Services Committee wrote in a statement last week that investor protections would increase with the passage of HJRes.109, as highly regulated institutions would be able to hold custody of cryptocurrencies and digital assets.
HJRes.109 was passed by the House of Representatives on May 8 with 228 votes in favor and 182 against. However, now that it has also been approved in the Senate, the bill has to go through the office of Joe Biden, current president of the United States, who has threatened to veto this resolution, under the pretext of not limiting the SEC's regulatory capacity in the crypto industry in favor of investor security.
