President Joseph R. Biden Jr. has vetoed House Joint Resolution 109 (H.J.Res. 109). This resolution sought to disapprove the Staff Accounting Bulletin No. 121 (SAB 121) of the U.S. Securities and Exchange Commission (SEC), which provides guidance on firms’ accounting practices for safeguarding crypto-assets.
President Biden highlighted the importance of SAB 121 in his decision, stating, “SAB 121 reflects considered technical SEC staff views regarding the accounting obligations of certain firms that safeguard crypto-assets.” He criticized the resolution for potentially limiting the SEC’s power and warned that it could limit the agency’s ability to handle future difficulties and establish accurate accounting practices.
The decision comes after Congress voted to repeal the cryptocurrency accounting guidelines, which require institutions to record crypto holdings as liabilities on their balance sheets. These guidelines, scheduled to take effect on April 11, faced significant backlash from both the crypto community and lawmakers.
President Biden’s administration is steadfast in its commitment to safeguarding consumers and investors while encouraging innovation in the cryptocurrency industry. “My Administration will not support measures that jeopardize the well-being of consumers and investors,” he affirmed. He stressed the need for regulatory guardrails to ensure the safe realization of the benefits of digital-asset innovation.
Despite the veto, President Biden expressed a willingness to collaborate with Congress in developing a balanced regulatory framework for digital assets. He believes such a framework will promote responsible development and reinforce the United States’ leadership in the global financial system.
Criticism Mounts Over Veto on Crypto Regulation
On social media platforms, many crypto community members voiced frustration and opined that the decision stifles innovation at a critical time. The Blockchain Association, a crypto advocacy group, expressed disappointment, pointing out that the veto goes against the bipartisan majorities in both Houses of Congress who acknowledged the potential harm of SAB 121.
Cody Carbone, chief policy officer at Digital Chamber, expressed his disappointment, calling it “a slap in the face to innovation and financial freedom.” Brad Garlinghouse, the CEO of Ripple, also expressed discontent, added, “This is incredibly disappointing from this white house – at an incredibly pivotal time – is an understatement.”
Analysts also weighed in on the decision, with Bloomberg’s James Seyffart suggesting that it reflects a more moderate shift in the Democratic Party’s stance on crypto regulation than anticipated. While some expected a complete reversal, the veto indicates a partial change, signaling adjustments rather than a comprehensive policy shift.
Nate Geraci, President of The ETF Store and Host of ETF Prime, also weighed in, describing the crypto industry as “the Wild West” due to its lack of regulation. He suggested that the government should allow reputable, regulated financial institutions to provide custodianship services for digital assets. Geraci further implied that rather than curtailing the regulatory powers of the SEC, the focus should be on having accredited, regulated organizations handle digital-assets for orderly and consistent growth of the industry.
President Biden’s veto of H.J.Res. 109 reflects the complexities and debates surrounding crypto regulation. While it signals a commitment to innovation and consumer protection, it also underscores the challenges of finding a balance between regulation and fostering growth in this rapidly evolving sector.
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