- The House is set to uphold Biden’s veto of a resolution to repeal SEC’s SAB 121, which impacts banks’ ability to hold digital assets.
- SAB 121 requires banks to record digital assets as both assets and liabilities, increasing compliance costs and differing from traditional practices.
- The veto override is unlikely, with around 60 members needing to change their votes, reflecting the contentious nature of cryptocurrency regulation.
A critical vote in the United States House of Representatives is expected to uphold President Biden’s veto of a measure revoking an SEC accounting guidance. The document, known as SAB 121, has major implications for institutions’ ability to store digital assets.
SAB 121, published by the Securities and Exchange Commission (SEC), addresses traditional investment banks’ custody of digital assets. This guidance requires banks to record these investments as both assets and liabilities, increasing compliance costs. The law differs from standard accounting rules, which allow banks to keep traditional financial assets off their balance sheets.
Prior to President Biden’s veto in May, the repeal resolution for SAB 121 passed both the House and the Senate with an easy vote. However, members say the resolution is unlikely to receive the required two-thirds majority to overturn the veto.
House leaders believe it is unlikely that 60 members will change their votes. This event highlights the divisive nature of cryptocurrency regulation, which has become a major political issue.
Prominent Republicans have criticized SAB 121 as an example of the SEC’s regulatory overreach. They say that the document, which served as guidance rather than an official regulation, bypassed standard regulatory procedures, such as a public comment period.
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The SEC uses the particular risks connected to digital assets, such as hacking vulnerabilities, to support the report. The agency intends to protect consumers and investors by adopting stricter custody rules.
The outcome of SAB 121 and its impact on the cryptocurrency business will be determined by the vote on Wednesday. While some cryptocurrency investors hope for an overrule, the chances remain low. This decision is critical because it will establish the regulatory framework for digital assets, balancing the need for innovation and investor protection.
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