Crypto industry faces its most critical two weeks in U.S. Congress—here’s what you need to know
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Crypto industry faces its most critical two weeks in U.S. Congress—here’s what you need to know
Major legislative developments in Congress could reshape the regulatory landscape for digital assets in the United States.
Navigating Web3 tides with focused insightsSource: bitcoinist
Translation: Blockchain Knight
The next two weeks could be decisive for the crypto industry, as it faces major legislative developments in the U.S. Congress that could reshape the regulatory landscape for digital assets in America.
Industry watchers are closely monitoring an upcoming Senate vote on repealing Staff Accounting Bulletin No. 121 (SAB 121). Originally issued by the SEC, SAB 121 requires financial institutions to list digitally native assets they hold on behalf of customers on their balance sheets.
This practice differs from traditional treatment of custodied assets, which are not considered part of a firm’s own balance sheet. Critics argue this may unfairly inflate banks’ reported assets and liabilities, leading to higher capital reserve requirements and potentially stifling growth in crypto custody services.
Last week, a bipartisan effort in the House succeeded in overturning the rule, with 21 Democrats joining Republicans in support.
Ron Hammond, Director of Government Relations at the Blockchain Association, said via X: "Last week, 21 Democrats took a tough vote and joined Republicans to repeal the SEC's SAB 121. This is an issue important to both banks and crypto assets, and a personal priority for SEC Chair Gensler."
The Senate, led by Senator Cynthia Lummis, is expected to follow suit this week. However, President Biden has signaled his intent to veto the repeal, requiring a two-thirds majority in Congress to override.
"Given the narrow majorities in both chambers, we’ve already seen some Congressional Review Act (CRA) resolutions pass on a bipartisan basis and reach the President’s desk—only to fail at this final stage," Hammond said. "Overriding a veto requires a two-thirds vote in Congress. Biden plans to veto this bill, so it will be an uphill battle."
Another key legislative item on the agenda is a bill introduced by Representatives Larry Bucshon and Lisa Blunt Rochester.
This bipartisan initiative is scheduled for a vote this week and would designate the Department of Commerce as the President’s primary advisor on blockchain-related matters. The bill also proposes establishing a federal advisory committee within the Department of Commerce to further integrate blockchain technology into federal governance and policymaking.
Another high-profile legislative push centers around the upcoming vote on the FIT 21 Act, set for May 23–24. Drafted by House Financial Services Committee Chairman Patrick McHenry, the bill represents the first comprehensive attempt in Congress to establish a federal regulatory framework for digital assets.
"FIT 21 is Chairman Patrick McHenry’s legacy project and marks the first time Congress will vote on a regulatory framework for crypto assets. This is a moment nearly a decade in the making," Hammond emphasized.
The bill has drawn significant attention, with amendments playing a crucial role in shaping its final form and increasing its appeal among both Democratic and Republican lawmakers.
These legislative efforts come amid heightened regulatory scrutiny by SEC Chair Gary Gensler and growing concern from the Biden administration about perceived risks associated with digital assets.
The administration maintains that SAB 121 is essential for investor protection and financial system stability. In contrast, many in Congress and the industry argue that the SEC’s current approach hampers innovation and fails to provide clear compliance guidance.
Moreover, the intersection of crypto policy and election-year dynamics cannot be overlooked.
With former President Trump recently embracing crypto assets and highlighting their bipartisan potential, crypto policy is emerging as a significant campaign issue.
"Trump entering the crypto space carries little political risk, but offers substantial upside—especially given that crypto-friendly candidates have won primaries across both parties," Hammond noted. "It positions crypto as a unique issue capable of influencing voter demographics, particularly younger voters who show sustained interest in digital asset technologies."
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