- US President Joe Biden has announced his intention to veto H.J. Res. 109, a legislation that aims to overturn the SEC’s SAB 121 which restricts financial firms from acting as custodians for Bitcoin and other digital assets.
- The veto is seen as a move to protect the SEC’s efforts to safeguard investors and the broader financial system.
- However, critics argue that SAB 121 hinders crypto innovation and market security, and that it imposes costly capital requirements on banks for digital asset custody.
In a significant development in the crypto space, US President Joe Biden has announced his intention to veto H.J. Res. 109, a legislation that aims to overturn the SEC’s SAB 121 which restricts financial firms from acting as custodians for Bitcoin and other digital assets. This move is seen as a step to protect the SEC’s efforts to safeguard investors and the broader financial system. However, critics argue that SAB 121 hinders crypto innovation and market security, and that it imposes costly capital requirements on banks for digital asset custody.
Biden’s Veto on H.J. Res. 109
The proposed legislation, H.J. Res. 109, seeks to nullify the SEC’s Staff Accounting Bulletin (SAB) No. 121, which introduces limitations for financial institutions regarding the safekeeping of digital assets. The Biden administration has strongly objected to this bill, stating that if H.J. Res. 109 were presented to the President, he would veto it on the grounds of disrupting the SEC’s efforts to protect investors and the broader financial system.
Congressional Support and Opposition
US Congressman Patrick McHenry, House Financial Services Committee Chair, has called for the overturn of SAB 121, arguing that the bulletin is a regulatory overreach by the SEC. He also pointed out that SAB 121 places high capital and liquidity requirements on banks, making it impractically expensive for them to custody digital assets. On the other hand, proponents of SAB 121 argue that the bulletin is significant in preserving the integrity of financial markets and safeguarding investors from the instability and threats posed by digital assets.
Industry Reaction and Implications
Cody Carbone, Chief Policy Officer at The Chamber of Digital Commerce, expressed disappointment at the Biden administration’s decision to veto H. J. Res. 109. He contended that SAB 121 practically prevents trusted custodians from administering digital assets. In addition, he criticized the SEC for violating the Administrative Procedures Act by issuing the bulletin without public comments or openness. Critics such as Jake Chervinsky noted that SAB 121 violated the CRA and APA to hurt the crypto industry.
Conclusion
The veto of H.J. Res. 109 by President Biden has sparked a debate on the role of regulatory bodies in the crypto space. While the move is seen as a step to protect investors and the financial system, critics argue that it hinders innovation and imposes unnecessary burdens on financial institutions. The outcome of this debate could have significant implications for the future of digital assets in the US.
