President Biden, SEC Face Backlash From Coinbase, Ripple, Crypto Industry

President Joe Biden recently vetoed a House Joint Resolution to repeal the Securities and Exchange Commission’s (SEC) Staff Accounting Bulletin 121 (SAB 121). This bulletin mandates financial institutions holding cryptocurrencies so that customers can list these assets on their balance sheets.

Critics argue that this requirement complicates the ability of financial institutions to collaborate with crypto companies. Biden’s statement emphasized that the veto was necessary for consumer and investor protection.

Concerns Over President Biden’s SAB 121 Veto

Prominent figures in the cryptocurrency industry have expressed their discontent with the President’s decision. Faryar Shirzad, Chief Policy Officer at Coinbase, criticized the veto, stating,

“The President was not served well by his team. He is using his extraordinary veto power to protect a sneaky bureaucratic move by the SEC Chair to hide behind his staff to destabilize an entire industry.” 

Shirzad argued that defending the views of an agency’s staff, which were not formally considered by the Commission, against bipartisan majorities in Congress is a disservice to President Biden and the Office of the President.

Ripple CEO Brad Garlinghouse also commented on the situation in an interview with CNBC. He highlighted the increasing institutional involvement in the crypto industry and noted that the election of leaders who support crypto innovation and consumer protection is a positive development. However, he expressed concerns about the broader implications of the SEC’s guidance on the industry.

Crypto Community Response

The veto has also drawn strong reactions from Congress. Senator Cynthia Lummis and Representative Patrick McHenry, critical proponents of the resolution, have voiced their opposition. McHenry stated, 

“The President’s veto weakens consumer protections in digital asset markets and upends decades of custody rules. By rejecting the bipartisan consensus of Congress, the Administration is doubling down on its failed approach. Senate action on #FIT21 is more urgent than ever.”

Both houses of Congress had passed the resolution with bipartisan support, reflecting widespread concern about the SEC’s approach to regulating digital assets. Lawmakers have urged the administration to reconsider the veto or work with the SEC to rescind the guidance.

The banking sector has also expressed reservations about the guidance. In a letter to President Biden, banking organizations noted that the Government Accounting Office’s assessment of SAB 121 blocks regulated banking groups from offering custody services. This sentiment was echoed by lawmakers, who stressed the need for a regulatory framework supporting innovation and consumer protection.

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