Overview of the first cryptocurrency bill submitted to the president: Are banks helping cryptocurrency to victory?

Source: Avichal - Electric ϟ Capital X Account

Author: Avichal - Electric ϟ Capital

Compiled by: Deep Tide TechFlow

The U.S. Senate has just overturned SAB 121 with a vote of 60 to 38, which is a big deal! This is the first cryptocurrency bill submitted to the president. What is SAB 121? Why is this vote important? How are banks helping cryptocurrency win here?

SEC Accounting Bulletin 121 was issued in 2022. It requires digital asset custodians to treat digital assets as liabilities and hold them at fair value on their balance sheets. Why would this be a problem?

SAB 121 has many issues, the biggest being: if banks are holding $1 billion in Bitcoin for clients, they must hold $1 billion in cash to offset this "liability" on their balance sheets.

This makes no sense; these assets are not the company's, they belong to the clients.

SAB 121 is clearly designed to exclude banks from the cryptocurrency market, which reduces protections for clients. This also conflicts with the OCC's guidance. While this is a minor issue, many can smell the political pressure behind it.

Twenty-one Democrats joined House Republicans to pass a bill overturning SAB 121. The Senate just overturned SAB 121 with a vote of 60 to 38 (including Leader @SenSchumer). The bill will be sent to @JoeBiden for signing or veto. He has indicated he might veto it.

Why is all this important? Why should anyone care?

Democrats have been following the leadership of @SenWarren in finance and technology. The Democratic leadership has broken ranks against the SEC's overreach, led by @SenWarren, marking a significant shift in power and leadership.

This sends a strong signal to @SenWarren, @JoeBiden, @SECGov, and the market. The Democrats have made it clear that they will align with moderates on market and financial regulatory issues, moving away from the far left. This is not surprising for those watching swing state polls.

How did this happen?

A) Democrats in Congress and the Senate understand the importance of cryptocurrency.

B) A lot of hard work behind the scenes by many individuals and groups (see below).

C) There are interesting and ironic incentives between banks and the crypto industry.

Insider government figures like @SenGillibrand, @SenLummis, @SenBooker, @RepRitchie, @PatrickMcHenry, @RepFrenchHill, and many others have been tirelessly working to persuade their colleagues that opposing crypto is detrimental to America. They all deserve our thanks.

Many Democrats who voted the right way understand the role of technology in national security. @sethmoulton is a veteran in military innovation, and @RepSlotkin is a member of the Intelligence Committee. They understand the role of technology and do not want to cede leadership.

How will banks help cryptocurrency? They called their Congress members and senators to explain why SAB 121 is bad. Because banks want to protect their own interests.

Banks are watching the record revenues of @Fidelity, @BlackRock, @BitwiseInvest, @coinbase, @Anchorage, and @circle. They now realize that cryptocurrency can bring them real revenue, and they do not want to be left behind.

I am not saying banks are allies now; they are self-interested. We can leverage this.

We can use their self-interest to push the world towards a more transparent, fair, auditable, decentralized, and private computing stack.

This vote also sent a strong message to the Democratic and Republican leadership. The crypto ecosystem has just proven its ability to change laws, and we can mobilize and persuade elected officials to change their minds, which should not be underestimated.

Now, if Biden vetoes it, SAB 121 may continue to be effective. In the long run, this is acceptable, and it will eventually be overturned.

As long as we keep moving forward, cryptocurrency will win. If for no other reason, it’s that the older rulers will die off before the average crypto holder.

As a group of technologists, the crypto industry has a long way to go to truly excel at working with policymakers to create good policy.

But this week is a significant victory for cryptocurrency and indicates a shift in momentum, and we should celebrate that.