Regulation
Biden Supports SEC Crypto Regulatory Guidelines Despite Industry Concerns
President Joseph R. Biden Jr. has vetoed House Joint Resolution 109 (HJRes. 109). This resolution sought to disapprove Staff Accounting Bulletin No. 121 (SAB 121) of the United States Securities and Exchange Commission (SEC), which provides guidance on companies’ accounting practices for safeguarding crypto-assets.
President Biden highlighted the importance of SAB 121 in his decision, stating, “SAB 121 reflects the technical views of the SEC staff regarding the accounting obligations of certain firms that safeguard crypto-assets.” He criticized the resolution as potentially limiting the SEC’s power and warned that it could limit the agency’s ability to manage future difficulties and establish accurate accounting practices.
The move comes after Congress voted to repeal cryptocurrency accounting guidelines, which require institutions to record cryptocurrency holdings as liabilities on their balance sheets. These guidelines, which are scheduled to go into effect on April 11, have faced strong backlash from both the crypto community and lawmakers.
President Biden’s administration is steadfast in its commitment to protecting consumers and investors while encouraging innovation in the cryptocurrency industry. “My administration will not support measures that jeopardize the well-being of consumers and investors,” he said. He stressed the need for regulatory measures to ensure the safe realization of the innovation benefits of digital assets.
Despite the veto, President Biden has expressed willingness to work with Congress in developing a balanced regulatory framework for digital assets. He believes that such a framework will promote responsible development and strengthen US leadership in the global financial system.
Criticism is growing over the veto on cryptocurrency regulation
On social media platforms, many members of the crypto community expressed frustration and said the decision stifles innovation at a critical time. The Blockchain Association, a cryptocurrency advocacy group, expressed disappointment, noting that the veto goes against bipartisan majorities in both houses of Congress that have recognized the potential harm of SAB 121.
Cody Carbone, chief policy officer at Digital Chamber, expressed his disappointment, calling it “a slap in the face to innovation and financial freedom.” Brad Garlinghouse, CEO of Ripple, also expressed discontent and added: “This is incredibly disappointing on the part of the White House – at an incredibly crucial time – is an understatement.”
Analysts, including Bloomberg’s James Seyffart, also weighed in on the decision suggesting reflecting a more moderate than expected shift in the Democratic Party’s stance on cryptocurrency regulation. While some expected a complete reversal, the veto indicates a partial shift, signaling adjustments rather than an overall policy shift.
Nate Geraci, president of The ETF Store and host of ETF Prime, also spoke: describing the cryptocurrency industry as “the Wild West” due to its lack of regulation. He suggested that the government should allow reputable and regulated financial institutions to provide custodian services for digital assets. Geraci also implied that rather than limiting the SEC’s regulatory powers, the focus should be on having accredited and regulated organizations manage digital assets for the orderly and consistent growth of the industry.
President Biden’s veto of HJRes. 109 reflects the complexities and debates surrounding the regulation of cryptocurrencies. While it signals a commitment to innovation and consumer protection, it also highlights the challenges of finding a balance between regulation and promoting growth in this rapidly evolving sector.
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