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11 Dems buck Biden as Senate passes rollback of crypto guidance

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Senate Majority Leader Chuck Schumer joined 10 other Democrats in defying Joe Biden and passed a measure that would undo SEC guidance on cryptocurrency accounting, sending the measure to the president’s desk on Thursday with stronger-than-expected bipartisan support.

The Senate voted 60-38 to back the effort, which would undo a rule that directs companies to mark digital assets as liabilities on their balance sheets. The White House has already said Biden would veto it, his first axing of a standalone crypto measure.

Critics, including banking groups and crypto executives, say the guidance could discourage banks from holding those digital assets. They contend that it should have gone through the SEC’s rulemaking process instead of being issued as guidance, which involves less public input.

“New York State already has a strong law on the books, and they weren’t consulted on this regulation,” Schumer said in a statement after the vote.

Sen. Cynthia Lummis (R-Wyo.), who led the effort in the Senate to kill the guidance, said it “puts consumers at risk.”

The rollback drew support from 11 Democrats: Sens. Kirsten Gillibrand of New York, Gary Peters of Michigan, Bob Casey of Pennsylvania, Jacky Rosen of Nevada, Jon Tester of Montana, John Hickenlooper of Colorado, Mark Kelly of Arizona, Cory Booker of New Jersey, Ben Ray Luján of New Mexico, Ron Wyden of Oregon and Schumer. Independent Sen. Kyrsten Sinema of Arizona, who aligns with Democrats, also backed the effort.

The SEC guidance “will limit options for consumers and leave them with less, not more consumer protection in cases of bankruptcy,” Gillibrand said.

Most Democrats and investor protection groups say the guidance safeguards consumers and the broader financial system. They also point to a Government Accountability Office report that found the SEC should have sent the guidance to Congress for review, but did not need to subject it to notice and comment.

“Today’s vote — coming more than two years after the SEC wrote the bulletin and applying to a staff bulletin, rather than a rule — is far outside the scope of the CRA,” Sen. Elizabeth Warren (D-Mass.), a top crypto critic, said on the Senate floor Thursday. “We should not be holding this vote, and all by itself that is a good enough reason to vote no.”

Warren added that the guidance “simply clarifies how companies should account” in their financial disclosures for the “unique risks of crypto.”

The House approved the measure last week with the help of 21 Democrats. Members, aides and lobbyists have eyed the tallies as possible bellwethers for a vote next week on House Republicans’ flagship crypto package.