Regulation
Battle over cryptocurrency regulation heats up as House passes key bills, Biden threatens veto
Biden Administration Opposes HR 4763 While Threatening Veto on HJ Resolution. 109 amid controversy over cryptocurrency regulation.
In a week marked by significant developments in the cryptocurrency regulatory landscape, the Biden administration has made clear its opposition to two key legislative actions affecting the digital asset market. These actions include the passage of H.R. 4763, the Financial Innovation and Technology for the 21st Century Act, by the House of Representatives, and the advancement of H.J. Res. 109, a joint resolution to overturn the Staff Accounting Bulletin of the Securities and Exchange Commission (SEC) n. 121 (SAB 121).
Opposition to H.R. 4763
HR 4763, led by Representative Thompson (R-PA) and co-sponsored by eleven other Representatives, seeks to reshape the regulatory framework for digital assets in the United States. The bill passed the House on May 23, 2024, reflecting a concerted effort by lawmakers to address the burgeoning digital currency and asset industry.
However, the Biden administration has expressed strong opposition to the bill in its current form. An administration statement emphasized the need for a more balanced approach that incorporates comprehensive consumer and investor protections. The administration has expressed its willingness to work with Congress to develop legislation that not only promotes innovation but also provides strong safeguards. The statement emphasizes that further time and discussions are needed to reach a regulatory framework that adequately protects digital asset market participants.
Veto threat on HJ resolution. 109
At the same time, the administration issued a statement threatening to veto the HJ resolution. 109 if it reaches the President’s desk. This joint resolution, introduced by Congressman Mike Flood (R-NE) and co-sponsored by Congressman Wiley Nickel (D-NC), seeks to rescind SAB 121 under the Congressional Review Act. SAB 121, issued by the SEC, mandates that financial institutions and companies that hold digital assets such as cryptocurrencies must record such assets on their balance sheets. This requirement has been deemed prohibitive by many regulated entities, potentially limiting their ability to offer cryptocurrency custody services.
While H.R. 4763 has a chance of becoming law, H.J. Res. 109 will be vetoed, Biden administration says.
HJ Res. 109 passed the House on May 8, 2024, with a total vote of 228 in favor (207 Republicans and 21 Democrats) and 182 against (all Democrats). Supporters argue that overturning SAB 121 will facilitate greater access to crypto services through regulated entities by removing the budget constraint, thus strengthening consumer protections.
However, the Biden administration strongly opposes the resolution, saying it would disrupt the SEC’s efforts to safeguard investors and maintain financial stability within the cryptocurrency markets. The administration emphasized that SAB 121 was a response to technological, legal, and regulatory risks that had previously led to significant losses for consumers. Rescinding this bulletin, according to the administration, would undermine the SEC’s ability to implement necessary guardrails and manage future risks in the cryptocurrency market.
Legislative implications
Like HJ Res. 109 goes before the Senate, the potential for a presidential veto adds a level of complexity to the legislative process. The administration’s firm stance on both H.R. 4763 and HJ Res. 109 highlights the critical balance between promoting financial innovation and ensuring comprehensive regulatory oversight.
The outcomes of these legislative actions will significantly shape the future of digital asset regulation in the United States, influencing how institutions manage, custodian, and innovate within the crypto space. As legislators, regulators and industry stakeholders continue to address these challenges, the need for a collaborative and balanced approach remains paramount.
For now, the administration’s clear opposition signals a cautious and measured path forward, prioritizing consumer protection and market stability amid the rapid evolution of digital financial technologies.