U.S. House Passes Bill Overturning SEC Crypto Regulations; Biden Threatens Veto
Summary:
The U.S. House of Representatives has approved a bill, H.J. Res 109, which overturns an SEC directive, SAB 121, that restricts banks from owning or custodizing clients' cryptocurrencies. However, President Joe Biden has indicated he will veto the bill if it reaches him. Despite being passed with 228 to 182 votes, the White House has expressed objection, stating the move could jeopardize investor protection and financial system stability. The matter is still developing, with more details anticipated.
In a recent development, the U.S. House of Representatives has approved a bill aimed at reversing a disputed directive from the Securities and Exchange Commission that prohibits banks from owning cryptocurrency. Yet, if the bill manages to reach him, President Joe Biden indicated early in the day that he would reject it. The House gave the green light on May 8 to a two-party proposal known as H.J. Res 109, which nullifies the SEC's SAB 121 Special Accounting Bulletin. This bulletin obliges banks to keep their clients' digital assets on their balance sheets, a rule not applicable to traditional assets like securities. Mike Flood, the Republicans' representative who proposed the resolution, stated that treating custodial assets as 'always off-balance sheet,' SAB 121 is discriminatory against banks wish to hold onto crypto. Notably, the bill won the favor of 21 Democrats and received all 207 votes from Republicans, leading to its approval with 228 votes against 182.
Despite gaining approval from the House of Representatives, the bill is said to be vetoed by President Joe Biden if it reaches him. In a May 8 declaration, the White House conveyed its potent opposition to the House members, aiming to nullify SAB 121. It warned that doing so would undermine the SEC's endeavors to safeguard crypto-asset investors and the wider financial system.
SAB 121, introduced by the SEC in March 2022, lays down the accounting rules for institutions intending to hold digital assets. In effect, it restricts banks from holding digital assets on their customers' behalf. SEC Commissioner Hester Peirce, among others, has argued that SAB 121 deters regulated banks from serving as crypto custodians and handles digital holdings differently than other assets.
The House Financial Services Committee (HSFC) wrote in statement on May 8 that by rejecting SAB 121, the two-party resolution assists in safeguarding customers by removing barriers that stop highly regulated financial bodies and firms from holding digital assets. The SEC's overstepping of authority was epitomized in SAB 121, said HSFC Chairman Patrick McHenry, referring to Gary Gensler's tenure at the agency. This story is still unfolding, and as more details emerge, they will be added.
Published At
5/9/2024 1:53:14 AM
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