Key Takeaways
- Biden stated that overturning SAB 121 could undermine the SEC’s authority over accounting practices
- My Administration will not support measures that jeopardize the well-being of consumers and investors,” Biden said.
President Joe Biden has vetoed a congressional resolution that aimed to overturn the SEC’s Staff Accounting Bulletin No. 121 (SAB 121).
SAB 121 requires publicly traded companies, including banks, to record crypto assets as both assets and liabilities on their balance sheets. This approach is in direct contrast with the conventional treatment of assets under custody, which typically do not appear on balance sheets as they are considered client-owned.
The rule has been criticized for making the safekeeping of digital assets economically unfeasible, potentially stifling innovation in the burgeoning crypto sector. Many in the crypto industry have argued that the bill imposed undue burdens on financial institutions and limited options for Americans seeking to store digital assets with traditional banks.
The resolution to repeal SAB 121 garnered bipartisan support in Congress. It passed the House of Representatives on May 10 with a 228-182 vote, with 21 Democrats joining Republicans in favor. The Senate followed suit on May 24, passing the measure with a 60-38 vote. Senate Majority Leader Chuck Schumer, D-N.Y., was among the Democrats who supported the repeal.
Despite the bipartisan backing, President Biden vetoed the resolution, emphasizing the need for consumer and investor protection in his statement. “My administration will not support measures that jeopardize the well-being of consumers and investors,” Biden said in a message released on May 31. “Appropriate guardrails that protect consumers and investors are necessary to harness the potential benefits and opportunities of crypto-asset innovation.”
In his May 31 letter to Congress, Biden warned that overturning SAB 121 could undermine the SEC’s authority over accounting practices. “This reversal of the considered judgment of SEC staff risks undercutting the SEC’s broader authorities regarding accounting practices,” he wrote.
The decision to veto the bill overturning SAB 121 received flak from several prominent members of the crypto community. Ripple CEO Brad Garlinghouse weighed in on the discussion by commenting that the move was “incredibly disappointing from the white house”.
Crypto advocacy group the Blockchain Association took to X to express their discontentment. “We’re disappointed that the admin chose to overrule bipartisan majorities in both Houses of Congress who recognized the harm created by SAB 121”.
