Weeks after President Joe Biden vetoed a bill passed by both houses of Congress that would have allowed American banks to hold crypto assets, the bill has returned to Capitol Hill—where lawmakers hope to hopes to pass it again, this time with a majority large enough to override the president's veto.

If both the House and Senate pass the bill – which would repeal the U.S. Securities and Exchange Commission's (SEC) Staff Accounting Circular Rule No. 121 (SAB 121) – this achievement would have ramifications. big for the US banking industry.

This would also send a clear message to the White House that the United States' fragmented political system can finally agree on one thing: the Biden administration's crypto policies are highly unpopular. Furthermore, the two-thirds vote now needed to override Biden's veto would require a significant U-turn from Democrats, at a time when the president is trying to block calls from within his own party. to give up his struggling re-election bid after his recent disastrous televised debate.

Crypto policy experts in Washington told Decrypt that while SAB 121 faces major challenges this week to pass with a large enough majority in the House, there are several factors that could help this bill achieve its goals.

“We're pushing the envelope and hoping that it's within reach — but I think it's a pretty high hurdle,” said Kristin Smith, CEO of the Blockchain Association, a crypto lobbying group based in New York. based in DC, told Decrypt.

However, she added that there are several factors that make her believe passage is possible. First of all, the initial repeal of SAB 121 – and the subsequent passage in the House of Representatives of the crypto regulatory framework, FIT 21 – both took the industry by surprise. Ultimately, 71 House Democrats broke with Biden to pass the latter bill, a number that on a good day in the chamber could constitute a majority.

Furthermore, the vote comes at an unprecedented moment in modern American politics, as Democratic lawmakers are struggling to express their displeasure with an increasingly unpopular candidate. without plunging their party into open rebellion.

Smith said that this week's SAB 121 vote could provide Democrats with a subtle — but clear — way to show a lack of blind loyalty to Biden.

“This will be an opportunity to demonstrate independent thinking, compared to what the White House has done,” Smith said.

Repealing SAB 121 would represent more than just abstract opposition to Biden's crypto policies. It would restructure the US economy by allowing traditional banks to hold crypto assets – something the SEC has banned.

The possibility of US banks acting as crypto custodians became more urgent this year, after the SEC approved spot Bitcoin ETFs and spot Ethereum ETFs for trading on Wall Street. These financial products require Bitcoin and Ethereum to actually be held by a third party. But because traditional US banks are prohibited from acting as crypto custodians, exchanges like Coinbase control the majority of assets associated with such spot ETFs.

This monopoly has come under increasing scrutiny in Washington. On Tuesday, Representative Wiley Nickel, a Democrat from North Carolina, expressed concerns about “concentration risks” due to “misguided” crypto policies like the SEC's SAB 121 during a meeting of the Commission. Financial Services Department.

“We have the best banks in the world,” Nickel said. “They should be able to take care of this part of the custodian bank.”

Other crypto lobbyists have heard rumblings on Capitol Hill that the unexpectedly strong support for crypto-related bills by Democrats in Congress last month could be limit for future votes, not a baseline.

“When some Senate Democrats voted in favor of [repealing SAB 121], they were simply checking the crypto box,” said Kris Klaich, Policy Director at crypto lobbying group Chamber of Commerce. Digital Commerce, told Decrypt. “It's their only chance to say they did something to support crypto without consequences, because they know the President will veto it.”

However, Democrats' calculus on crypto has become increasingly more complicated since former president Donald Trump began publicly flirting with the industry in recent months. On Monday, the Republican Party passed a draft party platform that explicitly advocates crypto, a first for a major American political party.

In light of these stronger moves, Democrats may feel new pressure to show they are not enemies of innovation and technological progress, Klaich added.

“There is also a view that because Trump is pro-crypto, that may have changed the dynamic and even fueled the fire to push Democrats down this pro-crypto path,” he said.

That way, Republicans could have put their Democratic colleagues right where they wanted them.

“This vote will reveal your elected officials' true stance on crypto,” Tennessee Sen. Bill Hagerty said Tuesday afternoon, about the upcoming vote to repeal SAB 121. The vote last time was predetermined by Biden's veto threat—this time it's real.”

“Pro-innovation Republicans have made our position clear,” he added. “Will Democrats have the courage to join us?”



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