President Joe Biden has vetoed H.J.Res. 109, a congressional resolution aimed at overturning the Securities and Exchange Commission’s current approach to banks and crypto.
Specifically, the resolution targeted the SEC’s Staff Accounting Bulletin 121, which provides guidance on how banks should handle customers’ crypto assets. Under this guidance, banks are required to treat crypto assets as liabilities. Banking groups have criticized this approach, arguing that it imposes significant costs on them for handling crypto. On the other hand, regulators defend the policy, emphasizing its importance in safeguarding investors, especially in light of the collapses of prominent crypto firms such as FTX.
Biden Veto and Congressional Debate on Crypto Custody
President Joe Biden has vetoed H.J.Res. 109, a congressional resolution aimed at overturning the Securities and Exchange Commission’s approach to banks and crypto custody.
In a statement, Biden defended the SEC’s Staff Accounting Bulletin 121 (SAB 121), which outlines how banks should account for crypto-assets. He argued that the resolution, invoked under the Congressional Review Act and largely supported by Republicans, would restrict the SEC’s ability to regulate and protect investors effectively.
Biden emphasized his administration’s commitment to consumer and investor protection, stating that measures undermining these protections would not be supported.
H.J.Res. 109 received bipartisan support with 21 Democrats in the House and Majority Leader Chuck Schumer among those backing it in the Senate. Despite Biden’s veto, Representative Mike Flood, the resolution’s Republican sponsor, urged reconsideration, citing widespread opposition to SAB 121 among legislators and stakeholders.
Opposition to SAB 121 and Biden’s Regulatory Framework Statement
Several organizations, including the American Bankers Association (ABA), other financial industry lobbying groups, and the crypto industry advocacy group Stand With Crypto, have voiced opposition to SEC’s Staff Accounting Bulletin 121 (SAB 121).
In an open letter to President Biden, these groups argued that SAB 121 hinders regulated banking organizations from offering digital asset custody at scale by treating the assets as owned liabilities rather than custodied assets.
Despite Biden vetoing H.J.Res. 109, the White House indicated willingness to engage in further negotiations on crypto regulation. Biden emphasized the administration’s commitment to collaborating with Congress to establish a comprehensive and balanced regulatory framework for digital assets. Such a framework, he stated, would build upon existing authorities, foster responsible development of digital assets and payment innovation, and uphold United States leadership in the global financial system.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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