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President Biden Uses Veto to Secure SAB 121, Protects SEC’s Crypto Outreach

Biden warns limiting SEC's ability to regulate crypto could threaten financial stability; overturning veto requires 2/3 majority in Congress.
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President Biden Uses Veto to Secure SAB 121, Protects SEC’s Crypto Outreach

Highlights

  • The White House statement notes that the decision to veto comes with the goal of protecting the well-being of consumers and investors.
  • Biden said that limiting the SEC's outreach on crypto would introduce substantial financial instability.
  • Overturning a veto necessitates a two-thirds majority vote in both houses of Congress.

President Joe Biden has opted to veto the bill despite lawmakers’ requests to revoke the controversial Securities and Exchange Commission’s (SEC) Staff Accounting Bulletin 121 (SAB 121).

What’s the SAB 121 Repeal for Crypto?

Last month in May, both the House and Senate voted to repeal the SEC’s staff accounting bulletin, known as SAB 121. The House passed the measure with a 228-182 vote, primarily supported by Republicans, though 21 Democrats also backed it. A week later, the Senate approved the repeal with a 60-38 vote, including several Democrats such as Senate Majority Leader Chuck Schumer, D-N.Y.

While addressing the U.S. House of Representatives on Friday, May 31, Joe Biden stated: “My Administration will not support measures that jeopardize the well-being of consumers and investors. Appropriate guardrails that protect consumers and investors are necessary to harness the potential benefits and opportunities of crypto-asset innovation.”

With this announcement, it is clear that the Biden administration is willing to maintain the SEC’s stronghold over crypto regulations. The statement from the White House further adds that ” limiting the SEC’s ability to maintain a comprehensive and effective financial regulatory framework for crypto-assets would introduce substantial financial instability and market uncertainty.”

The SAB 121 bulletin has drawn concerns over the past year, especially among the crypto industry. Many believe that the bulletin would prevent banks from offering crypto custodial services. The bulletin requires the crypto custodial firms to record the crypto holdings of its customers as liabilities on their balance sheets. However, the SEC has been defending SAB 121 calling it “non-binding staff guidance” that bolsters the disclosures to customers.

Will Lawmakers Overturn Biden’s Veto?

Overturning a veto necessitates a two-thirds majority vote in both houses of Congress. A veto won’t gain him any votes, but it could potentially cost him 500 votes in Wisconsin, Michigan, Pennsylvania, Arizona, and Nevada.

Responding to the White House decision to repeal the SAB 121, Ripple CEO Brad Garlinghouse stated: “To say that this is incredibly disappointing from this white house – at an incredibly pivotal time – is an understatement”.

He added: “If the Biden administration is actually serious about a shift (and finally waking up to the crypto electorate) – the single most important thing they can do is demand the resignation of Gary Gensler”.
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Bhushan Akolkar

Bhushan is a seasoned crypto writer with over eight years of experience spanning more than 10,000 contributions across multiple platforms like CoinGape, CoinSpeaker, Bitcoinist, Crypto News Flash, and others. Being a Fintech enthusiast, he loves reporting across Crypto, Blockchain, DeFi, Global Macros with a keen understanding in financial markets. 

He is committed to continuous learning and stays motivated by sharing the knowledge he acquires. In his free time, Bhushan enjoys reading thriller fiction novels and occasionally explores his culinary skills. Bhushan has a bachelors degree in electronics engineering, however, his interest in finance and economics drives him to crypto and blockchain.

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