US President Joe Biden Vows To Veto Resolution Against SEC Crypto Policy

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US President Joe Biden Vows To Veto Resolution Against SEC Crypto Policy

US President Joe Biden said he’ll veto a resolution approved by the House of Representatives to reject Securities and Exchange Commission (SEC) accounting guidance for the cryptocurrency industry that critics say deters banks from handling customers’ digital assets.

The guidance was issued in response to clear “technological, legal and regulatory risks that have caused substantial losses to consumers,” Biden said in a May 8 statement.

He added that he “strongly opposes” disrupting the work being done on this by the SEC.

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Lawmakers Call SEC’s Guidance A “Massive Deviation” From Accounting Standards

Since its arrival, the so-called SAB 121 guidance has been a focus of criticism from Web3 businesses and Republican lawmakers. Meant to clarify accounting treatment for crypto assets, SAB 121 directs a bank holding customers’ crypto to do so on its own balance sheet. Banks are subsequently put at risk of incurring massive capital expenses.

“Gary Gensler, in his jihad against digital assets, used what is supposed to be mundane staff accounting guidance to essentially freeze out large publicly traded banks from taking custody of digital assets,” Rep. Mike Flood (R-Neb.) said in a May 8 interview with CoinDesk.

Through this accounting policy, the SEC “made a joke of the rulemaking process and ignored other regulatory agencies,” chairman of the House Financial Services Committee Rep. Patrick McHenry (R-N.C.) said in a May 8 speech.

#WATCH: Chairman @PatrickMcHenry delivers remarks in support of H.J.Res. 109 to nullify SAB 121:

"This bipartisan resolution is an essential effort to protect consumers and foster innovation in digital asset markets."

Joe Biden Issues A Warning About Invoking The Congressional Review Act

Despite the criticism towards SAB 121, the White House still believes that defending the policy will be the best way to go moving forward.

But Republicans are pushing to reverse the agency’s rule under the Congressional Review Act. This would not only erase it, but also block the future implementation of something similar.

Invoking the Congressional Review Act could “inappropriately constrain the SEC’s ability to ensure appropriate guardrails and address future issues related to crypto-assets including financial stability,” Biden said.

As such, it “would introduce substantial financial instability and market uncertainty,” he added.