The United States bid to further deepen the regualtion of digital assets has received a major boost as President Joe Biden vetoed a resolution that would have overruled the U.S. Securities and Exchange Commission (SEC) Staff Accounting Bulletin (SAB) No. 121.
Biden’s decision was against the votes of the Congress which has voted to repeal the SAB 121 regulation by the SEC at both chambers. Biden said he vetoed the regulation in the interest of American investors and that challenging the proposed guidelines would compromise the SEC’s authority.
The controversial decision was immediately met with criticism from the cryptocurrency industry, according to a Cointelegraph report.
“We’re disappointed that the admin chose to overrule bipartisan majorities in both Houses of Congress who recognized the harm created by SAB 121,” crypto advocacy group the Blockchain Association declared in a May 31 X post.
“This reversal of the considered judgment of SEC staff in this way risks undercutting the SEC’s broader authorities regarding accounting practices,” Biden wrote in an official May 31 letter in response to Congress voting to repeal SAB 121.
SAB 121 entails cryptocurrency accounting guidelines which require institutions that custody crypto assets to record crypto holdings as liabilities on their balance sheets. The guideline effectively precludes regulated banking organizations from offering digital asset custody at scale since it treats the assets as if they are owned rather than simply custodied by a banking organization.
“My Administration will not support measures that jeopardize the well-being of consumers and investors,” Biden added.
The guidelines were set to take effect on April 11, but were met with considerable backlash from the crypto community and lawmakers alike.
Lawmakers in the House of Representatives voted to repeal the SEC’s guidance by a margin of 228 to 182 and passed the bill to the Senate.
Once there, senators echoed the House vote and elected to repeal SAB-121 by a significant margin, 60-38 votes.
The wider crypto community expressed their frustrations by the decision on social media, arguing that it only stifles innovation and hinders the industry during a critical time.
“This is a slap in the face to innovation and financial freedom,” Digital Chamber chief policy officer Cody Carbone stated in a May 31 X post.
“To say that this is incredibly disappointing from this white house – at an incredibly pivotal time – is an understatement,” Ripple CEO Brad Garlinghouse added.
