The House failed to override Biden’s veto on repealing SEC’s SAB 121 crypto policy, lacking the required two-thirds majority.
SAB 121 requires banks to record customers’ crypto assets on their balance sheets, raising concerns about higher capital demands.
A Government Accountability Office review found the SEC mishandled SAB 121, leading to congressional attempts to repeal it.
The U.S. House of Representatives recently failed to overturn President Joe Biden’s veto on the repeal of the SEC crypto accounting policy, known as SAB 121. Despite significant support, the effort did not achieve the necessary two-thirds majority, thus maintaining the veto.
𝗕𝗥𝗘𝗔𝗞𝗜𝗡𝗚: 𝗧𝗵𝗲 𝗛𝗼𝘂𝘀𝗲 𝘃𝗼𝘁𝗲 𝘁𝗼 𝗼𝘃𝗲𝗿𝗿𝗶𝗱𝗲 𝗕𝗶𝗱𝗲𝗻'𝘀 𝘃𝗲𝘁𝗼 𝗼𝗳 𝘁𝗵𝗲 𝗿𝗲𝗽𝗲𝗮𝗹 𝗼𝗳 #𝗦𝗔𝗕121 𝗵𝗮𝘀 𝗳𝗮𝗶𝗹𝗲𝗱 𝘁𝗼 𝗿𝗲𝗮𝗰𝗵 𝘁𝗵𝗲 2/3𝗿𝗱 𝗺𝗮𝗷𝗼𝗿𝗶𝘁𝘆. 𝗧𝗵𝗲 𝘃𝗲𝘁𝗼 𝗿𝗲𝗺𝗮𝗶𝗻𝘀 𝘀𝘂𝘀𝘁𝗮𝗶𝗻𝗲𝗱. #FireGaryGensler pic.twitter.com/0y1dioNzLk
— Subjective Views (@subjectiveviews) July 11, 2024
The attempt to override the veto saw bipartisan involvement, with 21 Democrats joining the majority of Republicans in support of repealing SAB 121 in May. However, the subsequent vote on Thursday mirrored earlier efforts, falling short of the needed majority. The final tally showed 228 lawmakers in favor and 184 against, with one Republican abstaining.
SAB 121 requires public companies, particularly banks, to record customers’ crypto assets on their balance sheets. This custody category has raised concerns within the banking sector due to potential higher capital demands.
SEC Chair Gary Gensler has defended the policy as a necessary response to industry regulation crisis, citing instances where customers’ assets were locked during crypto company bankruptcy filings.
Kristin Smith, CEO of the Blockchain Association, expressed strong objection to the legislation, describing it as a punitive move targeting digital assets . Smith emphasized a bipartisan consensus that the SEC’s stance on digital assets is flawed.
Earlier this year, a Government Accountability Office review concluded that the SEC had mishandled the policy by treating it as guidance instead of a formal rule. This led Congress to vote for its repeal through the Congressional Review Act (CRA), only to face Biden’s veto.
The President defended his veto by arguing that overturning SAB 121 would restrict the SEC’s ability to establish necessary regulations for future issues. He emphasized the importance of maintaining the agency’s capability to set appropriate guardrails.
In May, the House initially voted 228-182 to overturn the SEC policy, followed by the Senate with support from 11 Democrats joining all Republicans. Both chambers demonstrated a willingness to oppose Biden’s veto threat.
The crypto industry’s lobbying efforts continue despite this setback. This week, key figures from the sector met with lawmakers and a White House representative to discuss their concerns. Crypto investors await to see the decisions that the white house will make going forward and their effect on the crypto market.
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