SEC SAB 121 Stands as House Upholds Presidential Veto

On Thursday, the U.S. lawmakers voted 228 to 184 in support of overriding President Joe Biden’s veto of the measure to repeal the SEC Staff Accounting Bulletin No. 121 (SAB121) however, this did not receive the required two-third majority.

The vote division was 21 Democrats and 207 Republicans in support, while 183 Democrats and one Republican were against the vote. As a result, SAB 121 remains in effect. 

SAB 121 Stands as House Upholds Presidential Veto

The House has maintained the President Joe Biden’s veto on the decision making to reject the SEC Staff Accounting Bulletin No. 121 (SAB 121). This came after a legislator’s motion that sought to nullify the contentious bulletin did not pass through the required two-thirds of the total members of the house.

This vote which was scheduled to take place on Wednesday to override President Biden’s veto of the SEC’s Staff Accounting Bulletin No. 121 (SAB 121) was pushed to Thursday morning. The delay occurred after President Biden allegedly sent a letter to the House, which prompted the postponement of the vote. The content of the letter is still unknown.

Representative Patrick McHenry, who has publicly spoken against the SEC’s rule, showed his concern and annoyance at the delay. McHenry claimed that the rule is anti-crypto since it forces companies storing cryptocurrencies for clients to book these assets as liabilities on their balance sheets. He said, “We should not be doing business this way.”

Background on SAB 121

The motion to repeal SAB 121 was brought before the House in February by Reps. Mike Flood, R-Neb. , and Wiley Nickel, D-N. C. The bill was passed in both the House and the Senate before President Biden forged his veto saying that the measure endangered investors and the financial services sector.

Unfazed by the failed override attempt, Nickel is now pushing the Uniform Treatment of Custodial Assets Act into legislation. This draft bill aims at prohibiting the SEC from applying SAB 121 and, thus, making it possible for banks to provide digital asset services securely.

On the same note, the decision has elicited divergent opinions. The Chair of the House Financial Services Committee is Patrick McHenry, R- N. C. , accused the administration of placing political interest over the proper application of new technology. However, Ranking Democrat Maxine Waters came to the defense of SAB 121, noting that the SEC and custody banks are still engaged in a dialogue to further develop the guidance.

Political and Market Reactions

The postponement of the vote has caused different reactions from the stakeholders. A recent poll found that Republican voters have a positive perception of cryptocurrency and prefer laws that are clearly defined by their elected officials instead of regulatory agencies.

In the meantime, the Biden administration’s position regarding the retention of SAB 121 is a clear indication that the cryptocurrency market will remain closely monitored. This position might hamper the market sentiment as well as the confidence of the investors in the crypto space.

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