President Joe Biden has vetoed Congressional Resolution HJRes. 109, which aimed to overturn the current stance of the U.S. Securities and Exchange Commission (SEC) on banks and cryptocurrencies.
The resolution specifically targeted the SEC's Staff Accounting Bulletin 121 (SAB 121), which provides guidance on how banks should handle customers' crypto assets—essentially requiring them to treat these assets as liabilities. Banking groups have criticized this approach, arguing that it makes handling cryptocurrencies too costly, while regulators believe it is necessary to protect investors, especially in the wake of high-profile collapses like that of FTX.
In his statement, Biden said, "SAB 121 reflects the SEC staff's thoughtful view on the accounting obligations of companies that safeguard crypto assets." He added, "Invoking the Congressional Review Act, this Republican-led resolution would improperly limit the SEC's ability to implement appropriate regulatory measures and address future issues."
Biden further emphasized that his administration "will not support measures that jeopardize consumer and investor well-being."
HJRes. 109 passed with majority Republican support, but also saw backing from 21 House Democrats, including Senate Majority Leader Chuck Schumer. The President had previously indicated his intention to veto the resolution, while Representative Mike Flood (the Republican who introduced HJRes. 109 in the House) argued that Biden should reconsider given the "overwhelming opposition to SAB 121."
Opponents of SAB 121 include the American Bankers Association (ABA), other financial industry lobbying groups, and the crypto industry advocacy organization Stand With Crypto.
In an open letter to President Biden, the ABA and other industry groups stated, "SAB 121 effectively prevents regulated banking organizations from offering digital asset custody services at scale, as it treats these assets as owned by the banking organizations rather than simply held in custody."
The White House's statement left the door open for further negotiations on cryptocurrency regulation.
"My administration is eager to work with Congress to build on existing authorities to ensure a comprehensive and balanced regulatory framework for digital assets, which will promote the responsible development of digital asset and payment innovation and help reinforce America's leadership in the global financial system," Biden said.
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