Senate Votes 60-38 to Reject SEC Crypto Custody Accounting Bulletin

The U.S. Senate voted 60-38 on May 16, 2024, to pass H.J.Res.109, a Congressional Review Act resolution that would invalidate the Securities and Exchange Commission’s Staff Accounting Bulletin No. 121. Two senators did not vote. The official Senate record places the roll call at 11:31 a.m. and records the joint resolution as passed.

The vote completed congressional passage after the House approved the resolution 228-182 on May 8, 2024. It did not immediately remove the bulletin: H.J.Res.109 still required presidential action, and the Biden administration had already promised a veto. The Senate tally demonstrated bipartisan opposition to the SEC policy, but it was not sufficient by itself to assure an override of a veto.

What SAB 121 required

Issued by SEC staff on March 31, 2022, SAB 121 addressed companies responsible for safeguarding crypto-assets held for platform users. The bulletin said such an entity should recognize a liability reflecting its safeguarding obligation, measured at the fair value of the crypto-assets, together with a corresponding asset. It also called for disclosures about the assets being safeguarded, concentrations and related vulnerabilities.

The SEC described the treatment as a response to technological, legal and regulatory risks that differ from conventional asset-custody arrangements. Its stated purpose was to give investors more information about how those risks could affect a custodian’s operations and financial condition.

Opponents offered a different interpretation. They argued that recording customer crypto-assets through a safeguarding liability and corresponding asset enlarged regulated institutions’ reported balance sheets and could interact with bank capital requirements, making digital-asset custody uneconomic. That claimed prudential effect was central to the industry and congressional case against SAB 121; it was not a quantitative finding made in the Senate roll-call record.

An accounting dispute became a rulemaking fight

The procedural path mattered as much as the accounting treatment. On October 31, 2023, the Government Accountability Office concluded that SAB 121 qualified as a rule for purposes of the Congressional Review Act and therefore was subject to the act’s submission requirement. GAO reported that the SEC had not submitted the required report to Congress or the comptroller general. The SEC’s position, recorded by GAO, was that the bulletin was not an agency rule of future effect; GAO disagreed.

H.J.Res.109 used that determination to bring the bulletin before Congress. Under the Congressional Review Act, an enacted resolution of disapproval would leave the targeted rule with no force or effect. Consequently, the May 16 vote was more than an advisory rebuke: it placed the legal survival of the SEC staff guidance before the president.

The administration’s May 8 policy statement defended SAB 121 as part of the SEC’s investor-protection and financial-stability work. It also warned that using the Congressional Review Act could constrain the agency’s ability to address future crypto-asset risks. That was the administration’s contemporaneous position, not a determination that Congress lacked authority to proceed.

Why the vote mattered

The immediate institutional question was who could provide regulated crypto custody, and under what accounting and capital constraints. The broader question was whether an agency could use staff accounting guidance to establish a policy with significant consequences for digital-asset businesses without conventional notice-and-comment rulemaking.

The May 16 result did not settle either dispute. SAB 121 remained operative while H.J.Res.109 awaited presidential action. But the 60-38 tally showed that opposition to the bulletin extended beyond a narrow industry campaign or a single political party. For the crypto sector, it marked a significant congressional challenge to the SEC’s approach at the intersection of custody, accounting and administrative procedure.