President Biden’s veto threat shakes the crypto sector

• The Biden administration is threatening to veto a bill to allow regulated financial companies to hold Bitcoin, sparking debate over cryptocurrency regulation.
• Supporters argue that rolling back SEC regulations would promote innovation, while critics emphasize the need to protect investors.

President Joe Biden’s administration has sparked controversy with its stance on cryptocurrency legislation, particularly House Joint Resolution 109 (HJ Res. 109). Administration emitted an administrative policy statement indicating President Biden’s intention to veto the legislation, which would allow highly regulated financial companies to hold Bitcoin and other cryptocurrencies. Despite its position, the House vote overwhelmingly favored rejecting the SEC’s guidance, with bipartisan support from lawmakers critical of SAB 121’s impact on banking institutions.

House of Representatives votes to reject SAB 121

The U.S. House of Representatives recently passed a resolution rejecting the Securities and Exchange Commission’s (SEC) accounting guidance on cryptocurrencies, known as SAB 121. The move comes amid industry criticism and concerns regarding its impact on banks handling crypto transactions. However, President Joe Biden has signaled his intention to veto the resolution if it reaches his desk, citing the need to protect consumers and maintain regulatory stability.

SAB 121, issued by the SEC, aimed to clarify the accounting treatment of crypto assets, by ordering banks to record customers’ digital tokens on their balance sheets. However, these guidelines have faced backlash from digital asset firms and Republican lawmakers, who say they impose significant capital expenditures on banks and hamper their ability to effectively serve crypto customers.

Support and opposition to Congress

In support of the bill, Congressman Patrick McHenry, Chairman of the House Financial Services Committee, critical the regulatory overreach of the SEC under the leadership of Gary Gensler. He argues that the SEC guidance imposes excessive burdens on financial institutions when it comes to protecting digital assets. Alongside him is Congressman French Hill, who considers the SEC’s approach misguided and argues for reversing the administration’s position.

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On the other hand, critics like Cody Carbone, policy director of the Chamber of Digital Commerce, have expressed concerns about the administration’s stance, arguing that it could stifle innovation and hinder the growth of the crypto industry. This divide highlights the complexity of the regulatory landscape surrounding digital assets.

THE law Project aims to grant the SEC supervisory power over the accounting obligations of certain companies, thereby strengthening investor protections in the crypto space. This regulatory framework aims to mitigate technological, legal and regulatory risks associated with crypto assets, which could harm consumers if not financially controlled. However, the Biden administration’s veto threat put a damper on these efforts, leaving the future of crypto regulation uncertain.

Future prospects and speculation

Speculation abounds regarding the potential impact of political changes about the crypto industry. Some argue that a Republican administration would usher in a more favorable environment for cryptocurrencies, citing a perceived trend toward looser regulations. Multinational bank Standard Chartered echoed this sentiment, predicting a brighter outlook for crypto under Republican leadership.

Former SEC official John Reed Stark also weighed in on the issue, suggesting that a Republican president could pave the way for pro-crypto officials like Hester Pierce to lead the SEC. Such leadership changes could signal a shift in regulatory approach, potentially opening the door to greater acceptance and innovation within the crypto sphere.

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