Biden’s veto of SAB 121 repeal fuels debate on crypto regulation.
Ripple CEO Brad Garlinghouse calls for Gary Gensler’s resignation
In a move that has ignited controversy within the crypto community, US President Joe Biden vetoed the repeal of the Securities and Exchange Commission’s (SEC) Staff Accounting Bulletin 121 (SAB 121). This bulletin mandates that institutions holding cryptocurrency for clients must record these holdings as liabilities on their balance sheets, a requirement that has been heavily criticized by crypto advocates and financial institutions alike.
Last month, Congress showed rare bipartisan unity in voting to overturn SAB 121. The House passed the repeal with a 228-182 vote, gaining support from 21 Democrats. The Senate followed suit with a 60-38 vote, including backing from key Democrats such as Senate Majority Leader Chuck Schumer, D-N.Y.
In his statement to the House of Representatives on May 31, Biden emphasized the necessity of “appropriate guardrails” to protect consumers and investors, suggesting that the repeal of SAB 121 could undermine the SEC’s broader authority over accounting practices and introduce financial instability. “My Administration will not support measures that jeopardize the well-being of consumers and investors,” Biden declared.
“Slap In the Face to Innovation And Financial Freedom”
This veto has been met with vehement opposition from the crypto sector. Critics argue that the SEC’s guidelines, described as “non-binding staff guidance,” deter banks from offering custodial services for digital assets, thus stifling innovation. “This is a slap in the face to innovation and financial freedom,” tweeted Cody Carbone, chief policy officer at the Digital Chamber of Commerce.
Ripple CEO Brad Garlinghouse expressed profound disappointment, calling the decision “incredibly pivotal”. And suggesting that if the administration were serious about crypto reform, they would demand the resignation of SEC Chair Gary Gensler. “To say that this is incredibly disappointing from this White House – at an incredibly pivotal time – is an understatement,” Garlinghouse remarked.
The veto has broader political implications as well, with some analysts predicting it could affect Biden’s support in key swing states like Wisconsin, Michigan, Pennsylvania, Arizona, and Nevada. The battle over SAB 121 highlights the ongoing tension between regulatory bodies and the rapidly evolving crypto industry. Further, it sets the stage for further debates on the future of digital asset regulation in the United States.
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