President Biden says he would veto resolution countermanding SEC crypto rule

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United States President Joe Biden’s office has issued a statement informing lawmakers and the public that his administration plans to veto a joint resolution affecting crypto policy at the Securities and Exchange Commission (SEC) if it comes to his desk.

In a May 8 statement, the White House said it “strongly opposes” members of the House of Representatives seeking to pass a joint resolution it claims would disrupt the SEC’s efforts “to protect investors in crypto-asset markets and to safeguard the broader financial system.” H.J.Res. 109, introduced in the House in February, would overturn the SEC’s Staff Accounting Bulletin (SAB) No. 121, which requires banks to keep customers’ digital assets on its balance sheets, with capital maintained against them.

“SAB 121 was issued in response to demonstrated technological, legal, and regulatory risks that have caused substantial losses to consumers,” said the Biden administration. “By virtue of invoking the Congressional Review Act, it could also inappropriately constrain the SEC’s ability to ensure appropriate guardrails and address future issues related to crypto-assets including financial stability. 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.”

Source: White House

Democratic and Republican leaders from the House Financial Services Committee took to the House floor on May 8 to express their views on the resolution. Representative Patrick Henry, a Republican, urged lawmakers to support H.J.Res. 109, claiming that SAB 121 allowed the SEC “to dictate how financial institutions and firms safeguard Americans’ digital assets.”

Update: House votes to nullify SEC’s anti-crypto banking guidance SAB 121

“If you want Americans to be able to engage with digital assets safely and securely, banks — which are some of the most regulated businesses in our country — are probably the best way,” said Representative McHenry.

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Representative Maxine Waters, a Democrat and ranking member of the House committee, opposed the joint resolution, claiming that the SEC accounting rule allowed for greater transparency in the digital asset space. She reiterated claims in the SEC guidance that the rule was intended to address “unique risks and uncertainties” associated with cryptocurrencies and called McHenry’s efforts “harmful” and “partisan.”

“This kind of transparency helps prevent the kind of fraud and mishandling of crypto assets that led to the collapse of major crypto companies like FTX,” said Representative Waters.

After consideration in the House in which H.J.Res. 109 appeared to pass by a voice vote, Representative McHenry called for a count of the yeas and nays. The House chair postponed proceedings on the resolution “until a time to be announced.” Under the U.S. Constitution, the House could override President Biden’s veto with a two-thirds majority vote. 

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