House of Representatives Passes H.J.Res. 109: Bipartisan Effort to Overturn SEC Policy on Digital Assets

The House of Representatives made a historic decision yesterday by passing House Joint Resolution 109 (H.J.Res. 109) with a surprising bipartisan support. The resolution, which aims to overturn an SEC accounting policy known as Staff Accounting Bulletin (SAB) 121, received 207 Republican and 21 Democratic votes in favor, despite facing a potential veto from President Biden.

Representatives Mike Flood (R-NEB) and Wiley Nickel (D-N.C.), the co-sponsors of H.J.Res. 109, shared insights on the debate in the House, highlighting the broader implications of the SEC’s approach to digital assets. Flood criticized the SEC’s policy, stating that it hinders banks from custodying digital assets and leaves them unregulated.

Nickel expressed optimism about the bipartisan support for the resolution, noting that 21 Democrats stood with them on the issue. He acknowledged the challenges faced by Democrats in voting against the current Administration but emphasized the importance of protecting consumers and ensuring a safer environment for crypto custody.

Despite objections from some Democrats, including Ranking Member Maxine Waters, Flood and Nickel defended their use of the Congressional Review Act (CRA) to overturn the rule, citing the lack of consultation with prudential regulators responsible for banking.

In a message to the cryptocurrency industry, Flood urged them not to leave the U.S. and to engage with Senators and Members of Congress on this bipartisan issue. He reassured the industry that the U.S. will get the policy right, likening the situation to the cavalry coming to the rescue.

Nickel echoed Flood’s sentiments, urging the Administration and his Democratic colleagues to recognize the benefits of the resolution in protecting consumers and enabling banks to engage in crypto custody under regulatory oversight. He compared opponents of Web3 and digital assets to those who were against the Internet 20 years ago, emphasizing the need for a forward-thinking approach to regulation.

Overall, the passage of H.J.Res. 109 signals a significant shift in Congress’s stance on digital assets and sets the stage for further discussions on regulatory frameworks that balance innovation and consumer protection.