Regulation
House to reconsider Biden’s rejected cryptocurrency regulation bill
The U.S. House of Representatives is set to revisit a bill that would overturn a controversial Securities and Exchange Commission (SEC) directive that critics say prevents crypto companies from working with banks.
House Majority Leader Steve Scalise has foreseen the bill, previously veto by President Joe Biden in May, for review on July 9 or later.
.@SECGov SAB 121 returns to the House next week, the majority leader said… “Legislation that could be considered:
Veto Message Accompanying HJ 109 – Providing for the disapproval by Congress under Chapter 8 of Title 5, United States Code, of the rule submitted by the…— Blockchain Tip Sheet (@blockchaintpsht) July 5, 2024
Although the measure has already passed the House and Senate with bipartisan support, it may be difficult to obtain the two-thirds majority needed to override Biden’s veto.
The SEC issued Staff Accounting Bulletin No. 121 (SAB 121) in March 2022, advising financial institutions that hold cryptocurrencies on behalf of their customers to include these assets on their balance sheets as if they owned them.
The advice was criticalIze to discourage investment banks and other traditional financial entities from providing large-scale cryptocurrency custody services.
House Majority Leader Tom Emmer even called SAB 121 “illegal” and a “violation” of the SEC’s statutory mandate.
The SEC’s statutory mission is to protect investors, facilitate capital formation, and maintain fair, orderly, and efficient markets.
Chairman Gensler violates all three of these principles with his illegal SAB 121 rule. pic.twitter.com/Wky2K8zglR
— Tom Emmer (@GOPMajorityWhip) May 7, 2024
The Senate passed a resolution to repeal the accounting guidelines, which many critics said were unnecessary and discouraged investment.
Despite the controversial nature of SAB 121, there was enough bipartisan support for the measure to pass Congress.
Lawmakers, investment banks, crypto investors, and even some crypto skeptics—who are generally divided on many issues—have united in their desire to see SAB 121 repealed. They have argued that the guidance requires banks to treat crypto assets differently from other types of assets, creating unnecessary complexity and uncertainty.
While the guidelines do not constitute a formal rule, the lack of clarity on how much banks should hold against crypto assets or how SECOND Its application is said to have deterred several large companies from entering the cryptocurrency custody sector.
When President Biden vetoed the bill, he issued a letter On the White House website, he explained his decision. He stressed that his administration would not support measures that jeopardize the well-being of consumers and investors.
He also noted that SAB 121 reflected thoughtful technical views on the accounting obligations of companies protecting crypto assets.
Biden also said the Republican-led resolution to disapprove SAB 121 would inappropriately limit the SEC’s ability to establish appropriate regulatory frameworks and address future issues.
The US president explained that rescinding these guidelines would undermine the SEC’s broader authority over accounting practices. He also affirmed the need to put in place appropriate safeguards to protect consumers and investors, which are essential to harnessing the potential benefits of crypto innovation.
He also expressed his administration’s willingness to work with Congress to develop a comprehensive and balanced regulatory framework for digital assets, building on existing authorities to promote responsible development and maintain U.S. leadership in the global financial system.
As the House prepares to revisit the bill, the crypto industry and its supporters are closely watching to see if the measure can muster enough support to override the presidential veto and repeal SAB 121. The outcome could have a significant impact on how banks manage crypto assets and the future of cryptocurrency custody services in the United States.