Lawmakers optimistic about overturning the SEC's accounting bulletin as Senate prepares for vote

First up to bat is a legislative measure to overturn the Securities and Exchange Commission's staff accounting bulletin, dubbed SAB 121. The measure, led by Nickel and Rep. Mike Flood, R-Neb., passed out of the U.S. House last week with a vote of 228-182, and 21 Democrats voting for it. It is expected to be voted on this week.  

SAB 121, first published in 2022, has drawn controversy over the past year over concerns in the crypto industry that it could prevent banks from safeguarding digital assets. It requires firms that custody crypto to record customer crypto holdings as liabilities on their balance sheets.

Nickel, a crypto-friendly lawmaker, seemed optimistic that the measure to overturn SAB 121 would pass the Senate and added that it was passed out of the House in a bipartisan way. 

"It's [SAB 121] going to pass the Senate, I think, tomorrow, and then it's going to go to the President," Nickel said Wednesday at the Chamber of Digital Commerce's DC Blockchain Summit. "But if [SEC Chair Gary] Gensler just withdraws it, he can help make this issue more bipartisan, get it out of this political arena, where it should not be." 

Nickel's letter

Earlier in the day, Nickel penned a letter to Gensler, calling on him to withdraw SAB 121.

"Unfortunately, the SEC’s open hostility toward the digital assets industry isn’t serving President Biden’s best interests," Nickel said in the letter. "The SEC is turning cryptocurrency regulation into a political football and forcing President Biden to choose sides on an issue that matters to many Americans." 

The letter comes a week after the White House released a "statement of administration policy" saying President Joe Biden would veto Nickel and Flood's measure to overturn SAB 121 if it passes the Senate.

Sen. Ted Budd, R-N.C., said he thinks the measure can pass the Senate this week but added that President Joe Biden will likely veto it. 

"But it really sends a signal for the next administration on how they should approach this," Budd said during a separate panel at the Blockchain Summit on Wednesday. 

FIT 21

A vote on a bill called the Financial Innovation and Technology for the 21st Century Act is teed up for a House floor vote at the end of the month. The Republican-led bill, also dubbed FIT21, takes a comprehensive approach to regulating crypto at large and shifts more responsibility to the Commodity Futures Trading Commission. It is unlikely for that bill to pass this year as some top Senate Democrats have not shown interest in it or have opposed it. Investment bank TD Cowen has said a vote on the bill could shed light on how Democrats and Republicans view critical issues such as anti-money laundering and investor protections

Nickel said he was one of six Democrats who voted for FIT 21 when it passed out of the House committee last year. 

During the summit, he was asked whether Democrats who supported his SAB 121 measure would vote for the FIT bill. 

"I think we're going to see a larger group of Democrats in support of the bill," Nickel said.