President Joe Biden has vetoed H.J.Res. 109, a congressional resolution aimed at reversing the Securities and Exchange Commission’s current stance on banks and crypto.
The resolution specifically challenged the SEC’s Staff Accounting Bulletin 121, which provides guidelines on how banks should handle customers’ crypto assets, effectively requiring them to treat these assets as liabilities. Banking groups have criticized this approach as being too costly for managing crypto, while regulators maintain it’s necessary to protect investors, especially after the collapse of prominent crypto firms like FTX.
“SAB 121 reflects considered technical SEC staff views regarding the accounting obligations of certain firms that safeguard crypto-assets,” Biden explained in a statement. “By invoking the Congressional Review Act, this Republican-led resolution would inappropriately constrain the SEC’s ability to establish suitable guardrails and address future issues.”
Biden further stated that his administration “will not support measures that jeopardize the well-being of consumers and investors.”
H.J.Res. 109 garnered mostly Republican support, but it did see backing from 21 Democrats in the House, including Majority Leader Chuck Schumer in the Senate.
The president had previously indicated his intention to veto the resolution, while Representative Mike Flood, the Republican congressman who sponsored H.J.Res. 109 in the House, urged Biden to reconsider given the “overwhelming opposition to SAB 121.”
Opposition to SAB 121 includes the American Bankers Association and various financial industry lobbying groups, as well as the crypto industry advocacy group Stand With Crypto.
“SAB 121 effectively precludes regulated banking organizations from offering digital asset custody at scale since it treats the assets as if they are owned rather than simply custodied by a banking organization,” the ABA and other industry groups argued in an open letter to President Biden.
The White House’s announcement indicated a willingness to continue discussions on crypto regulation.
“My Administration is eager to work with Congress to ensure a comprehensive and balanced regulatory framework for digital assets, building on existing authorities, which will promote the responsible development of digital assets and payment innovation and help reinforce United States leadership in the global financial system,” Biden stated.
