President Biden vetoed cryptocurrency bill, defends SEC regulations

President Joe Biden vetoed a congressional resolution to repeal SEC Staff Accounting Bulletin 121 (SAB 121), reinforcing the administration’s commitment to stringent financial regulations.

The resolution, which gained significant support from Republicans and some Democrats, was passed by both the House and Senate on May 16.

Biden’s veto maintains SEC cryptocurrency oversight

SAB 121, introduced in March 2022, requires financial institutions to report customer digital assets. Critics say the rule places heavy operational and financial burdens on cryptocurrency companies. Sen. Cynthia Lummis, a key supporter of the resolution, said SAB 121 threatens consumers’ assets in bankruptcy by putting them on institutions’ balance sheets.

Facing backlash from crypto industry leaders and several lawmakers, Congress repealed SAB 121. The House of Representatives voted first, with 228 members supporting the repeal and 182 opposing it. A week later, the Senate voted 60 to 38 to repeal the rule. However, more votes were needed to prevent the president’s veto.

In a statement accompanying the document, Biden emphasized that his administration would not support any measures that would harm consumers and investors.

“By invoking the Congressional Review Act, this Republican-led resolution would inappropriately limit the SEC’s ability to establish appropriate guardrails and address future issues. This reversal of the SEC staff’s considered judgment threatens to undermine the SEC’s broader authority over accounting practices. “My administration will not support measures that threaten the well-being of consumers and investors,” Biden said.

Read more: Cryptocurrency Regulation: What Are the Advantages and Disadvantages?

Reactions to Biden’s veto were mixed in the crypto community. Some see it as a necessary step to protect investors, while others see it as an obstacle to financial innovation.

“The SEC’s actions, which prevent highly regulated U.S. financial firms from providing custodial services for Bitcoin, hinder financial innovation and competition. This could prompt companies to relocate to countries with more favorable regulations, resulting in a loss of capital, talent and technology for the United States. For American citizens, these restrictions limit access to financial innovation and investment diversification, putting them at a disadvantage compared to citizens of other countries,” Manuel Ferrari, co-founder of Money On Chain and MimLABS, told BeInCrypto.

Despite the veto, Biden expressed his willingness to work with Congress on new regulations for the digital asset market, emphasizing the need for measures to protect investors. The decision highlights the ongoing debate over how to regulate the cryptocurrency industry while balancing innovation with consumer safety.