- US Senate rejects SEC rule requiring banks to report cryptocurrency holdings on balance sheets, citing overregulation concerns.
- Ripple CLO Stuart Alderoty applauds Senate’s decision, views it as a stand against SEC Chair Gary Gensler’s overreach.
The US Senate recently voted to reject a Securities and Exchange Commission (SEC) rule that would have impacted custodial services for cryptocurrencies within regulated banks. Stuart Alderoty, the Chief Legal Officer at Ripple, supported the Senate’s decision, labeling it as a significant pushback against what he views as excessive control by SEC Chair 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, aimed to require banks to list customers’ cryptocurrency holdings on their balance sheets. This proposal faced opposition from the banking and cryptocurrency sectors, which argued that such a requirement would complicate custodial services and negatively influence banks’ financial statements because of the fluctuating value of cryptocurrencies.
Industry leaders, including Michael Saylor, co-founder of MicroStrategy, approved of the Senate’s decision, emphasizing the importance of protecting cryptocurrency owners’ rights.
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 Commissioner Hester Peirce, often referred to as “Crypto Mom” due to her supportive stance on digital assets, also expressed disapproval of the SEC’s inconsistent regulatory measures concerning custodial services for digital assets. She aligned with the broader industry view that the SEC’s approach could restrict sector 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’s vote displays bipartisan support for a balanced approach to regulating digital assets. This growing agreement among US lawmakers could positively shape forthcoming legislation, including potential regulations on stablecoins, thus fostering growth and broader acceptance of cryptocurrencies.
The decision to overturn the SEC’s rule is perceived as a preventative step against overregulation that might stifle innovation and infringe upon the rights of digital asset owners. Industry figures like Alderoty see this as a move 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 placing political agendas above investor protection. He claimed that SEC Chairman Gary Gensler’s interactions with certain individuals, despite those individuals facing legal issues, did not adequately protect investors.
Deaton pointed to his own legal successes, including a favorable judgment from 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 assisting them. He accused Senator Warren of using the SEC to advance her political goals, particularly through her focus on regulating stablecoins, which he argued shifts attention from more urgent issues facing her constituents in Massachusetts.
This ongoing debate highlights the tension between the need for effective cryptocurrency regulation and the desire to foster innovation within the sector.
