Bitrabo Editorial
The US House of Representatives has approved a resolution aimed at nullifying the Securities and Exchange Commission (SEC)’s 2022 bulletin pertaining to crypto custodian accounting.
President Joe Biden has voiced his opposition to the resolution and hinted at a possible veto should it progress through the Senate.
Joint Effort of Democrats and Republicans Challenges the SEC
A bipartisan effort on May 8 saw 21 Democratic House Representatives team up with 207 Republican Representatives to support H.J.Res.109, targeting the reversal of the Staff Accounting Bulletin (SAB) 121. This bulletin mandates crypto custodians to list digital assets as liabilities on their balance sheets.
The stringent rule has discouraged US banks from engaging in crypto activities, dubbing their crypto business as unfeasible. Congressman Mike Flood highlighted the unfairness of the SEC’s accounting standards for crypto custodians, hindering banks from offering such services.
With 228 representatives voting in favor and 182 against, the bill now awaits the Senate’s decision before potentially reaching the President’s desk. Approval would permit financial institutions to hold cryptocurrencies under reasonable conditions.
The bipartisan support garnered more backing from House Democrats than anticipated, though skepticism remains about the bill’s future in the Senate and the President’s office.
Critics of SAB 121, such as Patrick McHenry, Chairman of the Financial Services Committee, have condemned the bulletin as regulatory overreach under Gary Gensler’s SEC leadership.
During a speech supporting the resolution, McHenry emphasized consumer protection and digital asset market innovation as crucial priorities.
Senator Cynthia Lummis has also voiced dissent against the unnecessary SAB 121 regulation, criticizing government interference and the DOJ’s aggressive stance towards the crypto industry.
President Biden Backs SEC’s Crypto Regulation Stance
The White House responded to the US House Representatives’ supportive vote, stating the Biden administration’s strong opposition to the resolution’s advancement.
President Biden views the bill as disruptive to the SEC’s role in safeguarding crypto investors and financial stability and warns of constraints on the SEC’s regulatory capabilities under the Congressional Review Act.
Restricting the SEC’s authority over digital assets could introduce financial instability and market uncertainty, leading Biden to indicate a potential veto if the Senate passes the resolution.