Regulation
President Biden and the SEC face backlash from Coinbase and Ripple
President Joe Biden recently vetoed a joint House resolution to repeal Securities and Exchange Commission (SEC) Staff Accounting Bulletin 121 (SAT 121). This bulletin mandates financial institutions that hold cryptocurrencies so that customers can list these assets on their balance sheets.
Critics argue that this requirement complicates financial institutions’ ability to partner with crypto companies. Biden’s statement stressed that the veto was necessary for consumer and investor protection.
Concerns over President Biden’s SAB 121 veto
Prominent figures in the cryptocurrency industry have expressed their discontent with the President’s decision. Faryar Shirzad, Chief Policy Officer at Coinbase, criticized the veto, saying:
“The President was not served well by his team. He is using his extraordinary veto power to protect a sneaky bureaucratic move by the SEC chairman to hide behind his staff and destabilize an entire industry.”
Shirzad argued that defending the opinions of an agency’s staff, which were not formally considered by the Commission, against bipartisan majorities in Congress is a disservice to President Biden and the Office of the President.
CEO of Ripple Brad Garlinghouse he also commented on the situation in an interview with CNBC. She highlighted the growing institutional involvement in the cryptocurrency industry and noted that the election of leaders who support cryptocurrency innovation and consumer protection is a positive development. However, she expressed concern about the broader implications of the SEC guidelines on the industry.
Crypto community response
The veto also sparked strong reactions from Congress. Senator Cinzia Lummis and Rep. Patrick McHenry, critical supporters of the resolution, expressed their opposition. McHenry said:
“The President’s veto weakens consumer protections in digital asset markets and overturns decades of custody rules. By rejecting bipartisan congressional consensus, the Administration is doubling down on its failed approach. Senate action on #FIT21 is more urgent than ever.”
Both houses of Congress had passed the resolution with bipartisan support, reflecting widespread concern about the SEC’s approach to regulating digital assets. Lawmakers urged the administration to reconsider the veto or work with the SEC to rescind the guidance.
The banking sector has also expressed reservations about the guidelines. In a letter to President Biden, banking organizations noted that the Government Accounting Office’s assessment of SAB 121 prevents regulated banking groups from offering custodial services. This sentiment was echoed by legislators, who highlighted the need for a regulatory framework to support innovation and consumer protection.
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