The US Senate approved a repeal of the SEC’s Staff Bulletin 121 (SAB 121) on May 16, with 60 Senators voting in favor of HJ Res. 109 to overturn the bulletin, while 38 voted against it.

This vote reflects bipartisan support for reversing the SEC’s regulation. Among those voting in favor, 11 were Democrats, 48 were Republicans, and one was independent.

Representative Wiley Nickel characterized the vote as a bipartisan message against perceived SEC regulatory overreach, stating, “We never should’ve had to resort to using a Congressional Review Act to fix this issue, but unfortunately, it’s the only tool we have left.”

Congressman Tom Emmer supported the repeal, noting that the crypto sector is caught in a policy struggle between regulators and the public, and warned that a presidential veto could stifle opportunities for Americans.

President Joe Biden is expected to veto the resolution, as indicated by an administration notice on May 8, citing concerns that overturning SAB 121 could undermine investor protection and financial system stability.

Earlier, on May 9, the House of Representatives passed the resolution by a vote of 228 to 182, forwarding it to the Senate. While the majority in both chambers favors repeal, the Senate's vote is insufficient to override a presidential veto, requiring a two-thirds majority from both houses.

SAB 121 has sparked controversy by mandating that financial firms holding customer assets maintain these assets on their balance sheets. Critics argue it imposes high costs for banks acting as custodians for spot Bitcoin ETFs. Additionally, concerns have been raised about its application to both public and permissioned ledger assets, prompting calls for modifications rather than complete repeal.

Lawmakers have criticized SAB 121 for its content and the SEC’s approach in issuing the rule, with accusations that it bypassed public comment and formal rulemaking processes through staff guidance, as highlighted by Patrick McHenry.