$BTC $ETH $BNB ### Key Players Unite Against SEC Crypto Rule

In an unusual alliance, major Wall Street banking groups and prominent congressional members have urged President Joe Biden to reconsider his stance on a controversial SEC crypto accounting policy. They are asking the President to step back from his intention to veto Congress' recent resolution to overturn the SEC's Staff Accounting Bulletin No. 121 (SAB 121). This policy mandates that banks must treat customers' digital assets as their own, placing these assets on the banks' balance sheets. Both banks and crypto companies argue that this measure could significantly hinder their operations and competitiveness.
### Broad Bipartisan Support Against SAB 121
Congress displayed rare bipartisan unity in rejecting SAB 121. This accounting standard has been criticized for effectively preventing regulated banks from offering digital asset custody services at scale. By forcing these assets onto the banks' balance sheets, banks would face higher capital, liquidity, and other prudential requirements, unlike their non-bank competitors.
A letter to President Biden, signed by influential groups such as the American Bankers Association and the Financial Services Forum, emphasized these concerns. They argued that SAB 121 treats digital assets as if they are owned by banks rather than simply being custodied by them, thus imposing unnecessary burdens.
### Political Pressure from Both Sides
Senator Cynthia Lummis (R-Wyo.) and Representative Patrick McHenry (R-N.C.) also sent a letter to President Biden, requesting that he either avoid vetoing the resolution or collaborate with the SEC to rescind the staff guidance. They highlighted that the SEC has the authority to rescind SAB 121 and that there is ample precedent for revising staff accounting bulletins.
### Divided Democratic Party
Interestingly, 11 Senate Democrats, including Majority Leader Chuck Schumer (D-N.Y.) and Senate Finance Committee Chairman Ron Wyden (D-Ore.), have gone against President Biden's position. Senator Wyden, speaking at CoinDesk's Consensus 2024, criticized the SEC's policy for imposing a different standard on crypto compared to other financial sectors.
### SEC's Justification and Biden's Dilemma
SEC Chair Gary Gensler defended SAB 121, explaining it as a necessary response to the turmoil in the crypto market during 2022. He emphasized that the bulletin was intended to address the issue of collapsing crypto firms treating customer assets as part of their bankruptcy estates.
However, President Biden's threat to veto the resolution stems from his concern that overturning the rule under the Congressional Review Act would prevent the SEC from implementing similar measures in the future. This, he argues, would limit the SEC's ability to ensure proper safeguards and address future issues related to crypto-assets, including financial stability.
### The Countdown to Decision Day
President Biden has until Monday to decide whether to veto the resolution. The financial sector, crypto advocates, and political figures alike are eagerly awaiting his decision, which could have significant implications for the future of digital asset regulation in the United States.
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