TLDR
- President Joe Biden has vetoed a resolution to overturn the SEC’s Staff Accounting Bulletin (SAB) No. 121.
- SAB 121 requires institutions that store cryptocurrency assets to record cryptocurrency holdings as liabilities on their balance sheets.
- The resolution to repeal SAB 121 passed both the House and Senate with bipartisan support.
- Biden argued that challenging the proposed guidance would undermine the SEC’s authority and jeopardize the well-being of consumers and investors.
- The cryptocurrency community has expressed frustration with the decision, claiming it stifles innovation and hinders the industry.
President Joe Biden has vetoed a resolution to overturn Securities and Exchange Commission (SEC) Staff Accounting Bulletin (SAB) No. 121, a controversial accounting guide for the cryptocurrency industry.
The resolution, which received bipartisan support in both the House and Senate, aimed to repeal the SEC’s guidance requiring financial institutions that hold cryptocurrencies to require customers to keep the assets on their own balance sheets.
The House voted to repeal SAB 121 by a margin of 228 to 182, and the Senate echoed the decision by voting 60 to 38 in favor of repeal.
Despite significant support from lawmakers, President Biden decided to veto the proposed guidance, arguing that challenging it would undermine the SEC’s authority and jeopardize the well-being of consumers and investors.
Biden said in an official letter to Congress:
“Our government will not support measures that jeopardize the well-being of consumers and investors. “If the SEC staff’s prudent judgment is overturned in this way, there is a risk that the SEC’s broad authority over accounting practices will be undermined.”
The decision drew immediate criticism from the cryptocurrency industry and advocates.
The Blockchain Association, a cryptocurrency advocacy group, expressed disappointment with the administration’s choice to override bipartisan majorities in both houses of Congress that recognized the potential harm caused by SAB 121.
1/ Today, despite bipartisan support, President Biden refused to repeal SAB 121, the SEC’s punitive cryptocurrency accounting guidance. We are disappointed that the Administrator chose to ignore the bipartisan majorities in both houses of Congress that recognized the harm caused by SAB 121. pic.twitter.com/F6GP727UBx
— Blockchain Association (@BlockchainAssn) May 31, 2024
Critics of the guidelines argue that they make it too difficult for financial institutions to work with cryptocurrency companies and could hinder banks from protecting digital assets.
However, the SEC argues that SAB 121 is a “non-binding employee guidance” that enhances disclosure to investors and provides important insight into the level of risk taken by cryptocurrency managers.
The wider cryptocurrency community took to social media to express their displeasure with the decision, claiming it stifles innovation and hinders the industry at a critical time.
Ripple CEO Brad Garlinghouse called the veto “incredibly disappointing,” while Cody Carbone, chief policy officer at the Digital Chamber, called it “a slap in the face of innovation and financial freedom.” He described it as “a beating.”
But even just a few hours later, this post hasn’t aged well! ????
To say this is incredibly disappointing from this White House at an incredibly important time is an understatement. https://t.co/MYNSRVGyBP
— Brad Garlinghouse (@bgarlinghouse) May 31, 2024
Overturning the president’s veto would require a two-thirds majority in both houses of Congress, a hurdle that could be difficult given the current political climate.