President Biden Vetoes Crypto Custody Bill

President Joe Biden vetoed HJRes. 109, a congressional resolution that would have reversed the Securities and Exchange Commission’s current approach toward banks and crypto.

Specifically, the resolution targeted the SEC’s Staff Accounting Bulletin 121, which outlines rules for how banks can handle customers’ crypto assets — in effect, they must treat those assets as liabilities.

“SAB 121 reflects the technical opinions of the SEC staff regarding the accounting obligations of certain companies that protect cryptoassets,” Biden said in a statement. “By invoking the Congressional Review Act, this Republican-led resolution would inappropriately limit the SEC’s ability to put in place appropriate safeguards and resolve future problems.”

Biden went on to say his administration “will not support measures that jeopardize the well-being of consumers and investors.”

HJRes. Resolution 109 passed with mostly Republican support — but 21 Democrats supported the resolution in the House, and Senate Majority Leader Chuck Schumer was among the Democrats who supported it in the Senate.

The President had previously indicated his intention to veto the resolution, while Rep. Mike Flood (the Republican congressman who sponsored HJRes. 109 in the House) argued: “It is clear that there has overwhelming opposition to SAB 121, and I urge President Joe Biden to reconsider his previous statement of intent to veto the resolution.

Organizations opposing SAB 121 include the American Bankers Association and other financial industry lobbying groups, as well as crypto industry advocacy group Stand With Crypto.

“SAB 121 effectively prevents regulated banking organizations from offering custody of digital assets on a large scale, because it treats assets as if they were owned rather than simply as being held by a banking organization,” the ABA said and other industry groups in an open letter to President Biden.

The White House announcement left the door open for further negotiations on crypto regulation.

“My administration looks forward to working with Congress to ensure a comprehensive and balanced regulatory framework for digital assets, building on existing authorities, that will foster the responsible development of digital assets and payments innovation and help to strengthen the leadership of the United States in the global financial system. “Biden said.