Deadline for Biden to Veto SAB 121 Repeal Delayed

The delivery of H.J. Res 109 to President Joe Biden has been delayed, granting him an extended deadline until June 3rd to decide on the repeal of Staff Accounting Bulletin (SAB) 121. 

This resolution, which aims at reversing an SEC rule that regulates cryptocurrency custodial services, passed the Senate with the support of both Democrats and Republicans.

Deadline for Biden to Veto SAB 121

H. J. Res 109, the resolution to repeal SAB 121, was passed in the Senate last week with a 60 to 38 vote with 11 Democrats, 1 Independent, and 48 Republicans supporting the measure. The resolution is aimed at the SEC’s rule that would make banks report customer-owned digital currencies as their own assets on balance sheets, an initiative which has received much opposition from the banking and cryptocurrency industries.

The bill, proposed by the House Majority Whip Rep. Tom Emmer (R-Minn. ), focuses on the financial privacy and aims to curb overreach of government through financial transactions.

After the Senate vote, the resolution was not immediately transmitted to President Biden, altering the standard ten-day veto period to June 3rd. This delay is critical because it occurs during the congressional recess, thus affecting the possibility of a pocket veto and allowing the President ample time for the decision-making process while Congress is in its pro-forma sessions.

Presidential Decision Awaits

President Biden now faces three options regarding the Joint Resolution: He can approve it and sign it into law, he can reject it and veto it, or he can do nothing and it will become law. Initially, President Biden threatened a veto in the Statement of Administration Policy on May 8th arguing about financial regulation and supervision. 

Nonetheless, the precedents of previous veto threats show that the first threats do not necessarily lead to the application of the veto, which means the outcomes can be different.

However, the SEC’s rule has been under criticism with critics claiming that it would frustrate innovation and encroach on personal business through the regulation of personal finances.

Industry Reaction and Regulatory Context

The move by the Senate to repeal SAB 121 has however received the backing of the cryptocurrency industry, and particularly Ripple’s Chief Legal Officer, Stuart Alderoty who considered the repeal as a victory against overregulation. SEC Commissioner Hester Peirce, who is often referred to as “Crypto Mom,” also expressed similar sentiments while discussing her concerns about the SEC’s stance on digital asset regulation.

At the same time, Michael Saylor, the CEO of MicroStrategy, has welcomed the Senate’s move, stressing the importance of defending the rights of digital currency holders and avoiding excessive regulation that could undermine the US’s standing in the global financial industry.

Amid this tension, today, Sen Cynthia Lummis restated the growing support for crypto assets in Congress following recent wins of the Senate’s decision to repeal SAB 121 and passage of FIT 21.

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