- Senate voted 60–38 to overturn the SEC rule.
- Bipartisan support points to a possible shift in crypto regulation.
- Presidential veto remains a possibility.
In a significant move, the US Senate has approved legislation to overturn a Securities and Exchange Commission (SEC) rule that barred regulated financial firms from holding Bitcoin and other cryptocurrencies. The Senate vote follows a prior bipartisan approval in the US House, signaling a potential change in how digital assets are regulated in the United States.
The resolution, H.J. Res. 109, seeks to invalidate the SEC’s Staff Accounting Bulletin (SAB) No. 121, a rule that had been in effect for two years and restricted regulated institutions from custodying crypto assets. With a Senate vote of 60–38 and a House vote of 228–182, lawmakers demonstrated notable bipartisan agreement on reversing the guidance.
Bipartisan backing for H.J. Res. 109
Supporters of H.J. Res. 109 argue that allowing regulated financial firms to hold cryptocurrencies will broaden consumer choices and expand market opportunities. They say that banks and other regulated firms already maintain compliance systems and security measures that make them well-suited to manage cryptocurrency custody safely. Proponents contend that this change could enable more mainstream participation in the digital asset market while leveraging existing institutional safeguards.
Opponents, however, warned that eliminating the SEC guidance could introduce risks if adequate oversight and clear rules are not in place. The debate reflects broader tensions between enabling innovation and ensuring investor protection as crypto products and services move further into traditional financial channels.
Potential presidential veto
Following Congressional approval, the resolution now goes to the President. The White House has indicated a possible veto, expressing concern that reversing the SEC guidance could disrupt the agency’s efforts to protect investors in crypto-asset markets. Administration officials have argued that the SEC’s role in crafting and enforcing safeguards is important as regulators adapt to new technologies and products.
Despite those warnings, backers of the bill remain hopeful the President will appreciate the need for regulated firms to custody crypto assets, especially as demand for institutional-grade custody solutions grows. They point to recent developments—such as the SEC’s approval of spot Bitcoin exchange-traded funds (ETFs)—as evidence that crypto is becoming more mainstream and that regulatory frameworks should accommodate evolving market structures.
Industry reaction and next steps
The Senate’s action was welcomed by many industry participants, who view the vote as a step toward wider institutional adoption of cryptocurrencies. Firms in the asset management and banking sectors say permitting regulated custody could help legitimize digital assets and attract larger pools of capital, fostering market development and maturity.
At the same time, observers urge that clearer, consistent regulation remains essential. Industry experts emphasize that long-term stability for the cryptocurrency market depends on striking a careful balance between encouraging innovation and maintaining robust investor protections. They call for coordinated rulemaking that provides transparency and predictable standards for custody, disclosure, and risk management.
As the matter moves to the executive branch, stakeholders on all sides will watch closely. If signed, H.J. Res. 109 would remove the SAB 121 constraint and potentially open new pathways for regulated firms to offer crypto custody services. If vetoed, the debate over the appropriate regulatory approach to digital assets is likely to continue in Congress and among federal agencies as the market evolves.