• White House warns H.J. Res. 109’s veto could weaken SEC’s investor protection efforts.

  • Congressional support splits over SEC bulletin’s impact on digital asset regulation.

  • Industry voices, like the Chamber of Digital Commerce, raise concerns over SAB 121’s restrictions on custodial services.

President Joe Biden is poised to veto H.J. Res. 109, a legislative proposal aimed at revoking SEC Staff Accounting Bulletin (SAB) No. 121. The bulletin enforces stringent requirements on financial entities managing digital assets, which some lawmakers seek to overturn. 

The White House argues that eliminating these provisions could undermine the Securities and Exchange Commission’s ability to safeguard investor interests and maintain financial system stability.

Breaking: Biden Administration expresses that they would Veto Legislation Allowing Financial Firms to Custody Bitcoin and Crypto @POTUS has expressed that he would veto this House Joint Resolution if it came to his desk :https://t.co/BTlzw5cdpgHouse Joint 109 is:… pic.twitter.com/iptSMe8cMa

— MartyParty (@martypartymusic) May 8, 2024

Congressional Response

A faction within Congress supports the resolution, contending that SAB 121 represents regulatory overreach and imposes undue burdens on financial institutions. Patrick McHenry, chair of the House Financial Services Committee, criticizes the regulation for demanding that banks meet heavy capital and liquidity requirements. 

Similarly, Congressman French Hill challenges the necessity of holding reserves against custodial assets, stating this deviates from typical financial practices.

#WATCH: Chairman @PatrickMcHenry delivers remarks in support of H.J.Res. 109 to nullify SAB 121:"This bipartisan resolution is an essential effort to protect consumers and foster innovation in digital asset markets."Read more https://t.co/jnIBJFHIPj Watch pic.twitter.com/fOxOh8DtWH

— Financial Services GOP (@FinancialCmte) May 8, 2024

Industry and Legislative Pushback

The debate extends into the industry, with entities like the Chamber of Digital Commerce criticizing the government’s stance. Their Chief Policy Officer, Cody Carbone, highlights the difficulties SAB 121 creates for reputable custodians. 

Representatives Mike Flood and Wiley Nickel also express concerns, suggesting that the bulletin may increase risks by limiting custodian options, potentially heightening market concentration. As the resolution approaches a potential veto, the discord between governmental regulatory objectives and the aspirations of the crypto sector continues to escalate.

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