Regulation
Biden’s surprise veto signals that Democrats’ crypto-friendly era may have been wishful thinking
Experts say Biden’s latest move against cryptocurrencies could cost him the 2024 election.
Many thought the Biden administration was moving closer to cryptocurrencies after the Securities and Exchange Commission (SEC) green light Ethereum ETFs, while the Financial Innovation and Technology for the 21st Century (FIT 21) bill gained bipartisan support and Biden reversed his veto decision.
But it was short-lived.
Things took a surprising turn when US President Joe Biden made his decision veto legislation designed to dismantle Rule No. 121 of the SEC’s Staff Accounting Bulletin (SAB), although 11 Democrats voted in favor, joining 48 Republicans.
This move has led the crypto community to question the support of Biden and the Democratic party.
“Snatching defeat from the jaws of victory,” said Galaxy Digital’s Mike Novogratz. “THE [Democrats] they were trying to defuse [Donald] Trump is the president of cryptocurrencies and we are doing a great job. But this doesn’t help at all. Whoever is advising Biden needs to get his head examined.”
Prevent misconduct
SAB 121 requires financial institutions that hold crypto assets to record them as liabilities, ensuring that these entities maintain a one-to-one reserve of different assets and maintain rigorous internal records. The rule makes it difficult and expensive for banks to offer cryptocurrency custody services on a large scale.
Biden, however, insisted that this accounting guidance was necessary to protect customers and prevent financial misconduct. In a statement, he said his administration aims to work with Congress on a “comprehensive and balanced” cryptocurrency regulatory framework.
It will cost him dearly
The crypto community was not happy.
“We are disappointed that Biden chose to ignore the bipartisan majorities in both houses of Congress that recognized the harm caused by SAB 121,” Dan Spuller, vice president of the Blockchain Association She said.
Skybridge Capital’s Anthony Scaramucci didn’t mince words.
“[Biden’s] position on cryptocurrencies may be costing him more than he realizes,” Scaramucci tweeted. “It was a really bad decision to veto that bill. Especially in this critical moment.”
Cryptocurrency lawyer Pablo Enrique chimed in, saying, “With Biden vetoing even banking industry recommendations, it’s hard to see him passing anything truly solid regarding cryptocurrencies.”
Political force
Of the 335.89 million residents of the United States, an valued 50 million eligible voters are passionate about cryptocurrencies. Cryptocurrency ownership is particularly high minor demographic, with more than 40% of men aged 18-54 and more than 30% of African Americans and Hispanics owning cryptocurrencies in 2024.
The growing number of cryptocurrency holders, as well as considerable lobbying efforts with organizations such as Coinbase, the Blockchain Association and the Crypto Council for Innovation, means that the once-fringe blockchain industry is becoming a powerful political force.
Trump’s gain
Donald Trump has sought to position himself as the pro-cryptocurrency candidate, making a U-turn on his views on cryptocurrency. In May, the Trump campaign accepted cryptocurrency donations, expressed support for commuting Ross Ulbricht’s sentence, and vowed to keep crypto industry innovators in the U.S.
According to crypto betting exchange Polymarket, despite his conviction on May 30, Trump is expected to win the upcoming November election. Starting from the last one dataTrump’s chances of winning are 56%, while Biden’s are 37%.
Glimmer of hope
However, the passage of FIT 21, which aims to create a comprehensive legal and regulatory framework for cryptocurrencies and digital assets, provides a glimmer of hope for the cryptocurrency industry which is gaining greater bipartisan support.
The bill was approved in the House by a vote of 279 to 136 and in the Senate by a vote of 60 to 38. Specifically, 135 Democrats in the House supported FIT 21, while 27 Democrats in the Senate voted in favor.
This level of Democratic support for a cryptocurrency law is substantial compared to previous cryptocurrency laws.Invoices such as the Token Taxonomy Act (2018) and the Crypto-Currency Act of 2020 I had minimal Democratic support, with fewer than 10 and 5 Democratic co-sponsors, respectively.
But for some experts like Joe Vezzani, CEO of LunarCrush, it doesn’t matter whether Biden is for or against cryptocurrencies.
“I’m not worried about the short-term effects Biden will have on the industry,” he told The Defiant. “The industry will continue to grow and prosper with or without the support of these people, as it always has.”