- The U.S. Senate rejects the SEC’s rule requiring banks to report cryptocurrency holdings on their balance sheets, citing regulatory overreach.
- Stuart Alderoty, CLO of Ripple, applauds the Senate’s decision and sees it as a counter stance to SEC Chairman Gary Gensler’s overreach.
The U.S. Senate recently voted to reject a Securities and Exchange Commission (SEC) rule that would have affected cryptocurrency custody services within regulated banks. Stuart Alderoty, chief legal officer of Ripple, supported the Senate’s decision, calling it a significant pushback against what he sees as excessive oversight by SEC Chairman Gary Gensler.
Finally, something D’s and R’s can agree on: Gensler’s unauthorized overreach when it comes to crypto will not be tolerated. https://t.co/oOdOGOyxmB
— Stuart Alderoty (@s_alderoty) May 16, 2024
The rule, known as SAB 121, sought to force banks to include their customers’ cryptocurrency holdings on their balance sheets. This proposal faced opposition from the banking and cryptocurrency industries, which argued that such a requirement would complicate custodial services and negatively impact banks’ financial statements due to the fluctuating value of cryptocurrencies.
Industry leaders, including Michael Saylor, co-founder of MicroStrategy, endorsed the Senate’s decision, stressing the importance of protecting the rights of cryptocurrency owners.
Wall Street wants Bitcoin, the House of Representatives wants Bitcoin, and now the Senate wants #Bitcoin. pic.twitter.com/lLqBv2XZJy
— Michael Saylor⚡️ (@saylor) May 16, 2024
SEC CommissionerHester Peirce, often referred to as “Crypto Mom” for her supportive stance on digital assets, also expressed her disapproval of the SEC’s inconsistent regulatory actions regarding digital asset custody services. She aligned herself with the general industry view that the SEC’s approach could restrict industry innovation.
The Senate passing a CRA overturning SAB 121 is a win for financial innovation and a clear rebuke of the way the Biden admin and Gary Gensler have persecuted crypto.
It also marks the 1st time Congress has passed standalone crypto legislation.
We are just getting started.
— Senator Cynthia Lummis (@SenLummis) May 16, 2024
The Senate vote shows bipartisan support for a balanced approach to digital asset regulation. This growing agreement among U.S. lawmakers could positively shape upcoming legislation, including the potential regulation of stablecoins, thereby encouraging growth and greater acceptance of cryptocurrencies.
The decision to overturn the SEC rule is seen as a preemptive move against over-regulation that could stifle innovation and infringe on the rights of digital asset owners. Industry figures such as Alderoty see it as a step toward a more deliberate and informed regulatory approach to cryptocurrencies.
I am VERY proud to be one of the first to call out the @SECGov’s gross overreach. I sued the SEC on behalf of individual users and investors on January 1, 2021. Today, the Senate reached a bipartisan supermajority with 60 yes votes on SAB 121 – a resounding rebuke of the SEC’s… https://t.co/thENYFb1IN
— John E Deaton (@JohnEDeaton1) May 16, 2024
In a related critique, John Deaton, criticized both the SEC and Senator Elizabeth Warren for allegedly putting political agendas ahead of investor protection. He claimed that SEC Chairman Gary Gensler’s interactions with certain individuals, despite those individuals facing legal problems, did not adequately protect investors.
Deaton pointed to his own legal successes, including a favorable ruling by a judge appointed by former President Obama, as evidence of his dedication to consumer protection.
Below is another example of @ewarren placing a political agenda above investor protection. Describing today’s @SECGov, led by @GaryGensler, as a Guardian, protecting investors, would be laughable had the SEC not caused massive financial harm to the very people it’s supposed to… https://t.co/thENYFb1IN
— John E Deaton (@JohnEDeaton1) May 16, 2024
Deaton further criticized the SEC for what he sees as regulatory inconsistencies, exemplified by actions against companies like Coinbase after initially helping them. He accused Senator Warren of using the SEC to advance her political goals, particularly through its focus on regulating stablecoins, which he argued diverts attention from more pressing issues facing her constituents in Massachusetts.
This ongoing debate highlights the tension between the need for effective regulation of cryptocurrencies and the desire to encourage innovation in the sector.
