President Joe Biden has indicated he would veto a legislative effort that aims to overturn a Securities and Exchange Commission (SEC) rule affecting the treatment of cryptocurrencies. This development comes after the U.S. House of Representatives delayed proceedings on a contentious resolution that could impact the regulatory landscape for digital assets.
The resolution in question, H.J.Res. 109, seeks to nullify the SEC’s Staff Accounting Bulletin (SAB) No. 121, which mandates banks to include customers’ digital assets on their balance sheets and maintain adequate capital against them. Introduced in February, the resolution has stirred bipartisan debate on Capitol Hill.
Debate on the House Floor
The White House stated it “strongly opposes” the resolution, which it believes would undermine the SEC’s ability to protect investors and the broader financial ecosystem from crypto-related risks. The administration argued that SAB 121 addresses significant technological, legal, and regulatory challenges that have historically led to consumer losses. “SAB 121 was issued in response to demonstrated technological, legal, and regulatory risks that have caused substantial losses to consumers,” the statement from Biden’s office read.
On the House floor, lawmakers clashed over the resolution’s implications. Representative Patrick McHenry, a Republican, championed H.J.Res. 109, asserting that it would ensure digital assets are safeguarded by highly regulated financial institutions. He argued, “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.”
Conversely, Democratic Representative Maxine Waters defended the SEC’s rule, suggesting it promotes transparency and mitigates fraud risks in the volatile crypto market. She highlighted the rule’s role in addressing the unique challenges posed by cryptocurrencies, which had been underscored by the collapse of major firms like FTX. Waters criticized the resolution as “harmful” and “partisan,” reinforcing her stance that transparency is crucial for the integrity of the crypto space.
Implications and Next Steps
The debate underscores the deep divisions regarding the regulation of digital assets and the appropriate level of oversight necessary to ensure their safe integration into the financial mainstream. As the House postponed the resolution vote for a later date, the possibility of a presidential veto looms large, setting the stage for further legislative battles over the control and future of cryptocurrency regulations in the United States.
The resolution’s fate now hangs in balance, with potential implications for both the crypto industry and regulatory frameworks. Under the U.S. Constitution, should the resolution eventually pass, it would require a two-thirds majority in the House to override a presidential veto—a challenging hurdle that could shape the future interactions between legislative and executive powers over financial technology innovations.
