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U.S. President Blocks Resolution Challenging SEC Directive

Joe Biden announced his intention to veto the resolution before it was voted on by the House or Senate.

U.S. President Joe Biden vetoed a House Joint Resolution that aimed to repeal the Securities and Exchange Commission’s (SEC) Staff Accounting Bulletin 121, he announced Friday afternoon. 

SAB 121 is a controversial SEC accounting guideline requiring financial institutions holding crypto assets for customers to keep these assets on their own balance sheets. Critics argue that the guidance makes it too difficult for financial institutions to work with crypto companies.

In his statement announcing the veto, Biden stated that he would not support any “measures that jeopardize the well-being of consumers and investors.”

In his statement announcing the veto, Biden said he would not support any “measures that jeopardize the well-being of consumers and investors.” He added, “By virtue of invoking the Congressional Review Act, this Republican-led resolution would inappropriately constrain the SEC’s ability to set forth appropriate guardrails and address future issues. This reversal of the considered judgment of SEC staff in this way risks undercutting the SEC’s broader authorities regarding accounting practices.” 

Biden’s statement reiterated his previous comments on wanting to work with Congress on legislation addressing the digital asset market, emphasizing that “appropriate guardrails that protect consumers and investors are necessary.”

The veto came hours after banking groups and members of Congress sent letters to Biden, asking him to sign the resolution to overturn SAB 121. The banking organizations’ letter argued that the guidance, which the Government Accountability Office said blocks regulated banking groups from offering custody services, is problematic. The lawmakers’ letter urged the administration to work with the SEC to rescind the guidance if Biden still intended to veto the resolution, as he had threatened before the House voted on the measure.

The resolution passed both chambers of Congress with easy majorities. Earlier on Friday, Sen. Ron Wyden (D-Ore.), a member of Biden’s party who voted for the resolution, criticized the guidance at CoinDesk’s Consensus 2024 conference in Austin, Texas, stating it creates a different standard for crypto than for other assets in the financial sector.

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