U.S. House Fails to Override Biden’s SEC Veto of Bill That Would End Controversial SEC Guidance

As a seasoned crypto investor with a keen interest in regulatory developments, I’m disheartened by the U.S. House of Representatives’ failure to override President Joe Biden’s veto on the Securities and Exchange Commission’s (SEC) controversial crypto accounting policy, Staff Accounting Bulletin 121 (SAB 121). This policy has been a significant point of contention within the industry due to its potential implications for banks and digital asset custody.

Over half the members in the U.S. House of Representatives opposed President Joe Biden’s support for the SEC’s controversial crypto accounting rule. However, this group fell significantly short of the required two-thirds majority to overturn the president’s recent veto on the matter.

President Biden previously thwarted a bipartisan Congressional attempt to rescind Staff Accounting Bulletin 121 (SAB 121), a securities regulation policy, which was backed by 21 Democrats and most Republicans in May. The same number of Democrats opposed the president’s action during a Thursday vote. While it was predicted to fail, the crypto industry looked for additional evidence of broad-based U.S. legislative support. A total of 228 lawmakers voted in favor of the bill, while 185 were against it, and one Republican abstained.

As a crypto investor, I’ve come across the recommendation from SAB 121 for public companies, particularly banks, to keep their customers’ digital assets on their own balance sheets. This suggestion places crypto assets in a distinct custody category, and SEC Chair Gary Gensler has explained that it was a response to the chaos in the industry where customers’ assets were trapped in bankrupt crypto firms. However, this policy also poses a challenge for banks as they may face increased capital requirements if they decide to handle their clients’ cryptocurrencies.

Rep. Maxine Waters (D-Calif) stated in a recent development that ongoing negotiations between the Securities and Exchange Commission (SEC) and banking industry representatives might lead to “targeted adjustments” or an agreement on the contentious policy known as SAB 121. However, she cautioned that Republicans are moving forward with their harsh and all-encompassing approach despite this potential resolution.

Following a report from the Government Accountability Office that criticized the Securities and Exchange Commission for handling a policy as informal guidance instead of a formal rule, Congress utilized the Congressional Review Act (CRA) to repeal the contested regulation. However, President Biden subsequently vetoed this legislative action.

I, as an observer, note that the president disregarded the bipartisan backing in Congress to shield himself from potential embarrassment caused by his controversial SEC chair’s actions. Cody Carbone, the chief policy officer for the Digital Chamber representing the crypto industry in Washington, made this statement.

As a crypto investor, I can tell you that President Biden’s defense of the Securities and Exchange Commission (SEC) was rooted in the understanding that scrapping the Current Regulatory Framework (CRA) could have severe consequences. The CRA purge would prevent the SEC from considering similar regulatory policies moving forward, which is why the president cautioned against overturning it. In simpler terms, he believed that undoing the current regulations would unnecessarily limit the SEC’s power to establish necessary safeguards and tackle emerging issues in the digital asset sector.

In May, the House passed a resolution to reverse the Securities and Exchange Commission (SEC) policy by a vote of 228-182. The Senate also approved this measure with an additional 11 Democratic votes, joining all Republicans. Notwithstanding Biden’s warning that he would veto the resolution, Democrats openly challenged his stance in both chambers.

On Wednesday, over thirty influential individuals from the cryptocurrency industry held a discussion with legislators and a representative from the White House. The purpose of this meeting was to present contrasting viewpoints between the sector and the Biden administration.

Anita Dunn, one of Biden’s top advisers, appeared attentive and eager to grasp our concerns during our conversation with her, according to Paul Grewal, Coinbase’s legal chief, in an interview with CoinDesk. The crypto sector is urging the White House for a clear indication that it intends to match Republicans’ crypto-friendly stance. Essentially, the ball is now in their court.