$BTC $ETH $BNB ### Key Players Unite Against SEC Crypto Rule

In an unusual alliance, major Wall Street banking groups and prominent congressional members have urged President Joe Biden to reconsider his stance on a controversial SEC crypto accounting policy. They are asking the President to step back from his intention to veto Congress' recent resolution to overturn the SEC's Staff Accounting Bulletin No. 121 (SAB 121). This policy mandates that banks must treat customers' digital assets as their own, placing these assets on the banks' balance sheets. Both banks and crypto companies argue that this measure could significantly hinder their operations and competitiveness.
### Broad Bipartisan Support Against SAB 121
Congress displayed rare bipartisan unity in rejecting SAB 121. This accounting standard has been criticized for effectively preventing regulated banks from offering digital asset custody services at scale. By forcing these assets onto the banks' balance sheets, banks would face higher capital, liquidity, and other prudential requirements, unlike their non-bank competitors.
A letter to President Biden, signed by influential groups such as the American Bankers Association and the Financial Services Forum, emphasized these concerns. They argued that SAB 121 treats digital assets as if they are owned by banks rather than simply being custodied by them, thus imposing unnecessary burdens.
### Political Pressure from Both Sides
Senator Cynthia Lummis (R-Wyo.) and Representative Patrick McHenry (R-N.C.) also sent a letter to President Biden, requesting that he either avoid vetoing the resolution or collaborate with the SEC to rescind the staff guidance. They highlighted that the SEC has the authority to rescind SAB 121 and that there is ample precedent for revising staff accounting bulletins.
### Divided Democratic Party
Interestingly, 11 Senate Democrats, including Majority Leader Chuck Schumer (D-N.Y.) and Senate Finance Committee Chairman Ron Wyden (D-Ore.), have gone against President Biden's position. Senator Wyden, speaking at CoinDesk's Consensus 2024, criticized the SEC's policy for imposing a different standard on crypto compared to other financial sectors.
### SEC's Justification and Biden's Dilemma
SEC Chair Gary Gensler defended SAB 121, explaining it as a necessary response to the turmoil in the crypto market during 2022. He emphasized that the bulletin was intended to address the issue of collapsing crypto firms treating customer assets as part of their bankruptcy estates.
However, President Biden's threat to veto the resolution stems from his concern that overturning the rule under the Congressional Review Act would prevent the SEC from implementing similar measures in the future. This, he argues, would limit the SEC's ability to ensure proper safeguards and address future issues related to crypto-assets, including financial stability.
### The Countdown to Decision Day
President Biden has until Monday to decide whether to veto the resolution. The financial sector, crypto advocates, and political figures alike are eagerly awaiting his decision, which could have significant implications for the future of digital asset regulation in the United States.
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The Digital Chamber of Commerce has publicly criticized the Securities and Exchange Commission (SEC) for its recent regulatory actions against prominent crypto entities, including the issuance of a Wells Notice to Robinhood Crypto. This move is part of what the Chamber deems an excessive enforcement strategy that threatens the growth and stability of the digital asset industry.
SEC's Regulatory Strategy Under Fire
The Wells Notice, a formal warning of potential enforcement action, represents a significant step in the SEC’s ongoing scrutiny of companies within the cryptocurrency space, including others like Uniswap and Consensys. The Digital Chamber argues that these actions constitute an overreach of authority by the SEC, operating without explicit authorization from Congress.
The Chamber contends that the SEC's approach not only exceeds its jurisdiction but also undermines ongoing legislative efforts to establish clear and supportive regulatory frameworks for digital assets. They believe these efforts are crucial for maintaining transparency and promoting growth within the sector.
Impact on Innovation and Investor Protection
While Robinhood Crypto had proactively set up a special-purpose broker-dealer for its crypto operations, the SEC’s aggressive stance could potentially deter similar initiatives aimed at enhancing regulatory compliance and investor protection in the digital asset space. This situation has led to concerns that the SEC's actions are paradoxically at odds with its duty to protect investors, as it may stifle innovation and jeopardize the financial independence of millions involved with digital assets.
Calls for Legislative Review and Reform
In response, the Digital Chamber is urging Congress to take a closer look at the SEC’s actions and the overall regulatory framework for cryptocurrencies. They advocate for legislative action to correct jurisdictional oversteps and to foster a more conducive environment for the digital economy.
Prominent figures like House Majority Whip Tom Emmer have also voiced criticism of the SEC's tactics, which some crypto lawyers have described as a "carpet bombing campaign" against the sector. These legal experts argue that the SEC's broad and heavy-handed approach could lead to significant operational and legal challenges for the affected companies.
Expert Opinions and Corporate Responses
Legal experts in the cryptocurrency industry have expressed concern over the SEC’s strategy. Jake Chervinsky of Variant Fund pointed out that the flood of Wells Notices seems to employ intimidation more than actual enforcement. Additionally, Robinhood executives have countered the SEC's claims, asserting the legitimacy of the digital assets offered on their platform.
Adam Cochran, commenting on the broader implications for fintech innovation in the United States, highlighted the adverse effects of the SEC’s unclear guidelines and retrospective enforcement actions, which he believes have stifled investment and innovation in the American fintech sector.
As this regulatory drama unfolds, the Digital Chamber, along with industry leaders and legal experts, continues to push for a reevaluation of the SEC’s current approach, advocating for a regulatory environment that better supports the evolving landscape of digital currencies and blockchain technology.
#DigitalChamber #SEC #CryptoRegulation #Blockchain

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