President Joe Biden has vetoed a Congressional resolution seeking to overturn the SEC’s Staff Accounting Bulletin No. 121 (SAB 121), reinforcing the Administration’s commitment to strict financial regulations.
The resolution, which garnered significant support from Republicans and some Democrats, passed both the House and Senate on May 16.
Biden’s Veto Maintains SEC’s Crypto Oversight
SAB 121, introduced in March 2022, requires financial institutions to report customers’ digital assets. Critics argue that this rule places heavy operational and financial burdens on firms dealing with cryptocurrencies. Senator Cynthia Lummis, a key supporter of the resolution, claimed that SAB 121 jeopardizes consumers’ assets during bankruptcy by placing them on institutional balance sheets.
Facing backlash from crypto industry leaders and several lawmakers, Congress repealed SAB 121. The House of Representatives voted first, with 228 members supporting the repeal and 182 opposing it. A week later, the Senate voted 60-38 to overturn the rule. However, more than this vote count was needed to prevent a presidential veto.
In the statement accompanying the document, Biden stressed that his Administration will not back any measures that could harm consumers and investors.
“By virtue of invoking the Congressional Review Act, this Republican-led resolution would inappropriately constrain the SEC’s ability to set forth appropriate guardrails and address future issues. This reversal of the considered judgment of SEC staff in this way risks undercutting the SEC’s broader authorities regarding accounting practices. My Administration will not support measures that jeopardize the well-being of consumers and investors”, Biden stated.
Read more: Crypto Regulation: What Are the Benefits and Drawbacks?
Reactions to Biden’s veto have been mixed within the crypto community. Some see it as a necessary step for investor protection, while others view it as a barrier to financial innovation.
“SEC actions that prevent highly regulated US financial firms from custodial services for Bitcoin hinder financial innovation and competitiveness. This could drive businesses to relocate to countries with more favorable regulations, resulting in a loss of capital, talent, and technology for the US. For American citizens, these restrictions limit access to financial innovations and investment diversification, putting them at a disadvantage compared to those in other countries”, Manuel Ferrari, Money On Chain & MimLABS Co-Founder, told BeInCrypto.
Despite the veto, Biden expressed his willingness to work with Congress on new legislation for the digital asset market, stressing the need for measures to protect investors. This decision highlights the ongoing debate over how to regulate the crypto industry while balancing innovation with consumer safety.
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