President Joe Biden has vetoed a congressional resolution aimed at overturning the Securities and Exchange Commission’s (SEC) Staff Accounting Bulletin (SAB) No. 121. The resolution, H.J.Res. 109, targeted the SEC’s guidance on how banks handle customers’ crypto assets, treating them as liabilities.
The approach has faced criticism from banking groups, citing the high costs associated with handling crypto. However, regulators argue it is necessary to protect investors following the collapse of notable crypto companies.
In a statement, President Biden defended the SEC’s approach, stating that SAB 121 reflects the SEC’s considered technical views on accounting obligations for firms safeguarding crypto assets.
“By virtue of invoking the Congressional Review Act, this Republican-led resolution would inappropriately constrain the SEC’s ability to set forth appropriate guardrails and address future issues,” said Biden. “My Administration will not support measures that jeopardize the well-being of consumers and investors.”
The resolution received support primarily from Republicans, 21 Democrats in the House and Senate, including Majority Leader Chuck Schumer.
Crypto Organizations Criticize Biden’s Veto
The decision to veto the resolution has sparked frustration within the crypto community, with concerns raised about stifling innovation and impeding industry growth.
The Blockchain Association, a crypto advocacy group, expressed disappointment, stating that the administration’s choice to override bipartisan majorities in Congress was disheartening.
Others, such as Cody Carbone, the Digital Chamber’s chief policy officer, described it as a “slap in the face to innovation and financial freedom.”
Ripple CEO Brad Garlinghouse also expressed disappointment, emphasizing the critical timing for the industry.
Biden vetoes the resolution to nullify SAB 121.
Process? Who cares.
Consumer protection? No thanks.
Appeasing Gensler’s crypto vendetta? Sure thing.
This is a slap in the face to innovation and financial freedom. #Crypto #Fail pic.twitter.com/4QPhKkhN4r
— Cody Carbone (@CodyCarboneDC) May 31, 2024
Previously, the SAB 121 resolution drew opposition from various organizations, including the American Bankers Association and other financial industry lobbying groups, as well as the crypto industry advocacy group Stand With Crypto.
They argued that SAB 121 hindered regulated banking organizations from offering digital asset custody at scale, treating the assets as owned rather than custodied.
US House Passes Market Structure Bill
On a positive note for the crypto industry, the US House of Representatives recently passed the Financial Innovation and Technology for the 21st Century Act (FIT21).
The bill aims to establish regulatory frameworks for digital asset markets. It received bipartisan support, securing a 279-136 vote. The FIT21 bill intends to create a regulatory regime for US crypto markets, providing further clarity and structure to the industry.
“FIT21 provides the regulatory clarity and robust consumer protections necessary for the digital asset ecosystem to thrive in the United States,” Chairman Patrick McHenry said.
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Notably, President Biden has also expressed his opposition to this legislation, although he did not indicate that he would veto the bill.
Moreover, SEC Chair Gary Gensler has voiced strong opposition to the bill, arguing that it was unnecessary and posed a risk to existing securities regulations.
Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
