President Joe Biden vetoed HJRes. 109, a proposed congressional resolution that could have overturned the Securities and Exchange Commission's current approach to banking and cryptocurrencies.
Specifically, the resolution targets the SEC's Staff Accounting Bulletin 121, which lays out rules on how banks should handle their customers' crypto assets, effectively forcing banks to treat those assets as liabilities.
“SAB 121 reflects the SEC staff's careful technical view regarding certain companies' accounting obligations to protect crypto assets,” Biden said in a statement. “By invoking the Congressional Review Act, this Republican-led resolution will improperly limit the SEC's ability to develop appropriate guidance and address future issues.”
Biden also said his administration “will not support measures that put the well-being of consumers and investors at risk.”
HJRes. 109 passed with mostly Republican support, but 21 Democrats sponsored the resolution in the House of Representatives, and Senate Majority Leader Chuck Schumer was one of the Democrats who sponsored the resolution in the Senate.
The president had previously indicated his intention to veto the resolution, but Rep. Mike Flood (the Republican who introduced HJRes. 109 in the House of Representatives) argued that “it is clear that there is overwhelming opposition to SAB 121, and I urge President Joe Biden to reconsider his previous intention to veto this resolution.”
Groups opposed to SAB 121 include the American Bankers Association and other financial industry lobbying groups, as well as cryptocurrency industry advocacy group Stand With Crypto.
“SAB 121 effectively prohibits regulated banking organizations from offering large-scale digital asset custody services because it treats assets as if they are owned by the banking organization rather than merely in its custody,” the ABA and other industry groups said in an open letter to President Biden.
The White House announcement paves the way for further negotiations over cryptocurrency regulation.
“My administration is eager to work with Congress, building on existing authorities, to ensure a comprehensive and balanced regulatory framework for digital assets that will foster responsible development and payments innovation, and help strengthen U.S. leadership in the global financial system,” Biden said.