President Biden ready to veto crypto rule change bill

The White House strongly opposed HJ Res. 109, a bill to rescind SEC Staff Accounting Bulletin (SAB) No. 121. The bulletin imposes strict requirements on financial companies that manage digital assets, which the resolution seeks to rescind.

However, the president’s office says such a move would cause chaos in the Securities and Exchange Commission’s ability to protect investors’ interests and ensure the stability of the financial system. If this resolution arrived on the desk of Vice President Joe Biden, he would be ready to veto it.

Congressional Support for Overturning SAB 121

Prominent members of Congress favored HJ Res. 109, highlighting problems with the regulatory framework implemented by the SEC. Patrick McHenry, chairman of the House Financial Services Committee, believes SAB 121 is an example of regulatory overreach that imposes an excessive financial burden on banks.

He pointed out that the bulletin requires financial institutions to absorb costly capital and liquidity requirements when holding digital assets, which deviates from standard banking practices.

Congressman French Hill echoed similar concerns, arguing that holding reserves against assets in custody deviates from financial services standards. He views the Biden administration’s approach as fundamentally flawed and supports the resolution to overturn SAB 121.

Holding reserves on assets held in custody is NOT standard financial services practice.

Admin Biden’s SAB 121 is wrong and should be rescinded. I thank @USRepMikeFlood for his excellent work in leading an ARC resolution to reverse the SEC’s failure in their… pic.twitter.com/jwaTYWxhXs

– French Hill (@RepFrenchHill) May 8, 2024

Industry Perspective on Regulatory Restrictions

Advocacy groups like the Chamber of Digital Commerce are also critical of the administration’s digital asset policy. House Policy Director Cody Carbone condemned the SEC’s SAB 121 for effectively preventing reputable custodians from handling digital assets.

Congressmen Mike Flood and Wiley Nickel, who co-authored an opinion piece criticizing the SEC bulletin, expressed concerns that limiting custody options could increase concentration risks.

Like the debate around HJ Res. 109 intensifies, the gap between the Biden administration’s regulatory priorities and the crypto industry’s aspirations remains wide.

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