Regulation
US President Joe Biden vetoes the revocation of SAB 121
US President Joe Biden has vetoed Congressional resolution HJ Res.109, which seeks to repeal the US Securities and Exchange Commission (SEC) Staff Accounting Bulletin (SAB) No.121, a controversial measure of widely considered anti-crypto orientation. Interestingly, Biden’s action comes amid rumors that the incumbent government was trying to gain favor with crypto voters in the upcoming US general elections.
Repeal of SAB 121 will jeopardize investor interest, Biden says
On March 31, 2022, the SEC introduced SAB 121 which ordered all financial institutions that hold cryptocurrencies for customers to consolidate these assets on their balance sheet, thus preventing these companies from safeguarding such digital assets.
SAB 121 has received a lot of criticism for its perceived anti-crypto nature. It was also perceived as controversial guidance that allowed the SEC to bypass normal steps in its regulatory policy that often included stakeholder comments on any proposed regulation.
In early May, the U.S. Congress approved the repeal of SAB 121 with the House voting 228-182 and the Senate voting 60-38, in favor of repealing the SEC Staff Accounting Bulletin. However, Biden did now rejected this resolution citing several reasons.
First, Biden said that repealing those guidelines would “inappropriately undermine” the SEC’s ability to establish the right regulatory frameworks and address future issues. Additionally, the US president said the proposed resolution could expose US investors to certain harms and risks.
Biden said:
My Administration will not support measures that jeopardize the well-being of consumers and investors. Adequate guardrails that protect consumers and investors are needed to capitalize on the potential benefits and opportunities of cryptocurrency innovation.
The President also commented on the lack of clear federal rules and regulations for the crypto space. He said:
My Administration looks forward to working with Congress to ensure a comprehensive and balanced regulatory framework for digital assets, building on existing authorities, that will promote responsible digital asset development and payments innovation and help strengthen state leadership United in the global financial system.
Will Biden Government Return to ‘Default’ Crypto Policy?
Amid the sudden approval of the Ethereum spot ETF, among other events, there has been speculation that the current administration may soften its stance on the use of digital assets. However, Biden’s recent action is likely to call those beliefs into question.
This is widely expected US crypto users (worth 46 million) will seek to make an impact at the October polls to protect their interests in the current hostile regulatory regime.
Whether the Biden government intends to persuade these voters remains largely to be seen, however, former President Donald Trump, Biden’s direct opposition and former Bitcoin critic he began to argue for the development of cryptocurrency in the United States.
Featured image of the White House, chart by Tradingview