House to Reconsider Biden’s Vetoed Cryptocurrency Regulatory Bill

The U.S. House of Representatives is set to reconsider a bill aimed at overturning a controversial Securities and Exchange Commission (SEC) directive that critics say bars cryptocurrency firms from partnering with banks.

House Majority Leader Steve Scalise has scheduled the bill, previously I placed the veto by President Joe Biden in May, for reconsideration on or after July 9.

Although the measure had previously passed both the House and Senate with bipartisan support, reaching the two-thirds majority needed to override Biden’s veto could be a challenge.

In March 2022, the SEC published Accounting Bulletin No. 121 (SAB 121), advising financial institutions that hold cryptocurrencies on behalf of customers to include such assets on their balance sheets as if they were the owners.

The guide was criticIcrammed to discourage investment banks and other traditional financial entities from providing cryptocurrency custody services on a large scale.

House Majority Leader Tom Emmer even called SAB 121 “illegal” and a “violation” of the SEC’s statutory mission.

The Senate had voted on a resolution to repeal this accounting directive, which many critics said was unnecessary and discouraged investment.

Despite the controversial nature of SAB 121, there was sufficient bipartisan support for the measure to pass Congress.

Lawmakers, investment banks, crypto investors and even some crypto skeptics, who are usually divided on many issues, have come together in their desire to see SAB 121 repealed. They have argued that the guidance forces banks to treat cryptocurrencies differently than other types of assets, creating unnecessary complexity and uncertainty.

While the guidance is not a formal rule, the lack of clarity on how much banks should hold of cryptocurrencies or how SEC This would have deterred several large companies from entering the cryptocurrency custody industry.

When President Biden vetoed the bill, published a letter on the White House website explaining his decision. He stressed that his administration would not support measures that jeopardize the well-being of consumers and investors.

He further noted that SAB 121 reflects thoughtful technical opinions on the accounting obligations of cryptocurrency-securing firms.

Biden also argued that the Republican-sponsored resolution to disapprove SAB 121 would improperly limit the SEC’s ability to establish appropriate regulatory frameworks and address future problems.

The US President explained that rescinding the guidance would undermine the SEC’s broader authority over accounting practices. He also stated the need for appropriate safeguards to protect consumers and investors, which are essential to reaping the potential benefits of cryptocurrency innovation.

He also expressed his administration’s willingness to work with Congress to develop a comprehensive and balanced regulatory framework for digital assets, building on existing authorities to promote responsible development and maintain U.S. leadership in the global financial system.

As the House prepares to reconsider the bill, the crypto industry and its supporters are watching closely to see if the measure can garner enough support to overcome a presidential veto and repeal SAB 121. The outcome could have a significant impact on how banks handle cryptocurrencies and the future of cryptocurrency custody services in the United States.

Source