Bitcoin
Wall Street Urges Biden Not to Veto Congress’s Rejection of SEC’s SAB 121 Crypto Policy
In a rare lobbying overlap with the crypto world, Wall Street banks and members of Congress are calling on President Joe Biden to reverse course on his promise to veto the US Congress’s resolution to overturn the US Securities and Exchange Commission’s (SEC) crypto accounting policy.
In recent bipartisan votes, in which many members of Biden’s party rejected his opposition, Congress decided to reject the SEC’s Personnel Accounting Bulletin No. 121 (SAB 121) – a controversial accounting standard that would require banks to handle digital assets of customers differently from other assets. requiring them to be kept on a bank’s balance sheet. Crypto companies have argued that this threatens their ability to do business with banks, and bankers agree.
“SAB 121 effectively prevents regulated banking organizations from offering large-scale custody of digital assets as it treats the assets as if they were owned rather than simply held in custody by a banking organization,” according to a letter to Biden on Friday Monday, signed by several groups including the American Bankers Association and Financial Services Forum. “Institutions that are forced to record digital assets in custody on the balance sheet are subject to higher capital, liquidity and other prudential requirements, unlike their non-bank competitors.”
The letter arrived the same day that Sen. Cynthia Lummis (R-Wyo.) and Rep. Patrick McHenry (R.N.C.) published your own letter to Biden, dated May 30, similarly asking him not to veto, or at least “work with the SEC to rescind the staff guidance.”
“Rescission of SAB 121 is within the authority of the SEC and there is ample precedent for reviewing a team accounting report,” the letter said. “In fact, most staff accounting bulletins over the past three decades have been revisions and rescissions of previous guidance.”
Seven other representatives signed the letter, including Reps. Mike Flood (R-Neb.) and Wiley Nickel (D-N.C.), the resolution’s sponsors.
Biden veto threat the resolution noted that erasing the rule under the Congressional Review Act would mean that nothing similar could be implemented by the SEC in the future, which would “inappropriately restrict the SEC’s ability to ensure appropriate protections and resolve future issues related to cryptoassets, including financial stability .”
The group of 11 Senate Democrats who went against the president included Majority Leader Chuck Schumer (D-N.Y.) and Sen. Ron Wyden (D-Ore.), chairman of the Senate Finance Committee, who said at CoinDesk Consensus 2024 on Friday that the S.E.C. “basically sets a different standard for crypto than everyone else in the financial industry.”
Last week, SEC Chairman Gary Gensler tried to explain SAB 121 as an attempt by the regulator to respond to the turmoil and investor harm that happened in crypto during 2021. He argued that it was “just” a staff bulletin intended to address the fact that the failures of collapsing crypto companies were treating clients’ assets as part of their bankruptcy estate.
Biden has See you on Monday to make a final decision on whether or not to veto the resolution.