May 22, 2024 | Read Online

Byron Gilliam

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"Life moves pretty fast."

- Ferris Bueller

Crypto is Suddenly Bi-Partisan

Crypto made accounting history last week when the SEC's Staff Accounting Bulletin 121 was overturned by Congress.

As suggested by the name, SAB 121 was the 121st accounting bulletin issued by the SEC since they began expressing their views on accounting standards sometime in the 1970s.

I can't be any more precise than that, because there is no record of SAB 1 on the internet.

(The closest my extensive Googling and GPT-ing could find was SAB 39, issued in 1980.)

Even the SEC's website, which seems to otherwise document everything the SEC has ever done, makes no mention of it.

That's probably because, technically, SABs are not law — they only represent the "staff's views" on accounting matters, which is usually some arcane detail that attracts little attention outside the accounting profession and therefore leaves little trace of itself.

Anything related to crypto, however, attracts a lot of attention.

So much so, in this case, that SAB 121 has become the first ever Staff Accounting Bulletin to be nullified by Congress.

It wasn't close, either: Joint Resolution 109, expressing "congressional disapproval" of the SEC's view of crypto accounting, breezed through the Senate in a 60-39 vote.

Does that surprising margin of victory mean crypto is becoming a bi-partisan issue?

It's too soon to say.

But there are signs.

Crypto's week off

One such sign is that the White House, having formally threatened to veto Joint Resolution 109, has been silent since its passage.

A pre-vote Statement of Administration Policy (SAP) stated plainly that, "If the President were presented with H.J. Res. 109, he would veto it."

They must have meant it at the time, (why else would they underline it??) so now, deciding not to veto would risk losing some credibility on future policy statements.

And yet, that appears to be what's happening because H.J. Res. 109 has been presented to the president and he hasn't vetoed it.

Why would President Biden risk any amount of credibility for the sake of crypto?

I can only imagine that the intensity of pro-crypto sentiment on social media has made an impression on whoever is running his re-election campaign.

It certainly seems to have made an impression on Democrats in the House, where HR 6572, which instructs the secretary of commerce to make crypto businesses feel welcome in the US, passed this week by a vote of 334-79.

The news got even better this morning.

The Biden administration issued another crypto-related SAP, this time stating its opposition to House Resolution 4763, the crypto-friendly bill that's up for a vote in the House today.

But the wording of the statement is weak, only opposing the bill "in its current form."

And the most crypto-friendly news in the statement is what's not in the statement: Unlike the previous SAP, no veto is threatened.

Not threatening a veto is hardly an endorsement, of course, but it seems to represent an abrupt change in tone from the "anti-crypto army" rhetoric that we'd gotten so accustomed to.

Better yet, the change seems to be coming from on high.

The ETF whisperer James Seyffart thinks that Monday's news was such an abrupt change that it must have been the result of a political decision "that came from the top."

If so, that's likely a result of political pressure coming from the bottom.

No SEC accounting guidance has ever gotten the popular attention that SAB 121 did, and that is probably a large part of why it's now the first to ever receive a Congressional rebuke.

A US president walking back an SAP-threatened veto is a rare event, as well — and if that's what's happening, it must be because the pro-crypto army is making itself heard.

That noise has been turned up to 11 since former President Trump made crypto an election issue while touting his NFT collection at Mar-a-Lago just 14 days ago.

In that time, the Democratic party appears to have moved from being virulently anti-crypto to decidedly neutral on the subject — and possibly on its way to being pro, if this week's voting margins are any guide.

Has a major political party ever moved its position on a policy issue this far, this fast?

My extensive Googling and GPT-ing suggests not.

So, if crypto voters are looking as smug as Ferris Bueller this week, it's because the history they're making may be more than just accounting.

― Byron Gilliam

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