- President Biden has until June 3 to decide on vetoing H.J. Res 109, which seeks to repeal SEC’s SAB 121 impacting crypto custodial services, after bipartisan Senate approval.
- The resolution, which aims to reverse an SEC rule regulating cryptocurrency custodial services, passed the Senate with bipartisan support.
- Senator Cynthia Lummis highlights the increasing Congressional backing for cryptocurrency regulations.
President Biden faces a critical decision on the repeal of SEC’s SAB 121, with significant implications for the crypto industry.
Deadline for Biden to Veto SAB 121
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 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.
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 financial privacy and aims to curb overreach of government through financial transactions. After the Senate vote, the resolution was not immediately transmitted to 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 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, Senator 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.
Conclusion
President Biden’s decision on H.J. Res 109 will be pivotal for the future of cryptocurrency regulation in the United States. With significant bipartisan support and industry backing, the repeal of SAB 121 could mark a substantial shift in how digital assets are regulated. As the June 3 deadline approaches, stakeholders across the financial and crypto sectors will be closely monitoring the administration’s next steps.
