President Biden vetoes crypto custody bill
Can you detail the bipartisan nature of the support for H.J.Res. 109, including notable Democrats who backed the resolution?
H.J.Res. 109, the congressional resolution that sought to overturn the Securities and Exchange Commission's (SEC) Staff Accounting Bulletin 121 (SAB 121), received bipartisan support in both the House of Representatives and the Senate. In the House, 21 Democrats joined 207 Republicans in voting for the resolution. Notable Democrats who supported the resolution included Representative Mike Flood, the co-sponsor of H.J.Res. 109, and Representative Wiley Nickel. In the Senate, the resolution passed with a vote of 60-38, with support from 11 Democrats, 1 Independent, and 48 Republicans2. Majority Leader Chuck Schumer was among the Democrats who supported the resolution in the Senate.
Why have banking groups criticized the SEC's approach mandated by SAB 121 as outlined in the news article?
Banking groups have criticized the SEC's approach mandated by SAB 121 because it requires financial institutions to treat customers' crypto assets as liabilities on their balance sheets. This requirement makes it significantly more expensive for banks to handle crypto, as they would need to hold a dollar for every dollar's worth of crypto they hold for their customers. Banks argue that this effectively precludes them from offering digital asset custody services at scale, putting them at a disadvantage compared to non-bank competitors and foreign banks that are not subject to the same requirements2. The American Bankers Association and other financial industry groups have called on the SEC to modify or rescind SAB 121, stating that it threatens the ability of banks to develop responsible use cases for digital assets and permissioned distributed ledger technology projects6.
What reasons did President Joe Biden provide for vetoing H.J.Res. 109, which aimed to overturn the SEC's approach?
President Joe Biden provided several reasons for vetoing H.J.Res. 109, which aimed to overturn the Securities and Exchange Commission's (SEC) current approach to banks and crypto, specifically targeting the SEC's Staff Accounting Bulletin 121 (SAB 121).
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Biden stated that SAB 121 reflects considered technical SEC staff views regarding the accounting obligations of certain firms that safeguard crypto-assets. He believed that overturning it through the Congressional Review Act would inappropriately constrain the SEC's ability to set forth appropriate guardrails and address future issues.
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The president also emphasized that his administration "will not support measures that jeopardize the well-being of consumers and investors." He implied that the resolution could potentially harm consumers and investors, and therefore, he decided to veto it.
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Furthermore, Biden expressed his eagerness to work with Congress to ensure a comprehensive and balanced regulatory framework for digital assets, building on existing authorities, which will promote the responsible development of digital assets and payment innovation and help reinforce United States leadership in the global financial system3.
In summary, President Biden vetoed H.J.Res. 109 because he believed that overturning the SEC's approach would inappropriately constrain the SEC's ability to set forth appropriate guardrails, potentially jeopardize the well-being of consumers and investors, and hinder the responsible development of digital assets.