The United States House of Representatives recently voted to pass a bill aimed at overturning controversial Securities and Exchange Commission (SEC) guidance prohibiting banks from owning cryptocurrencies. Despite bipartisan support for the bill, President Joe Biden has threatened to veto it if it reaches his desk.
On May 8, the House approved a bipartisan bill known as H.J. Res 109, which nullifies the SEC’s Special Accounting Bulletin (SAB 121). This guidance mandates banks to include their customers’ crypto assets on their balance sheets, unlike traditional assets like securities.
Republican Congressman Mike Flood, the bill’s sponsor, argued that SAB 121 unfairly burdens banks by treating custodial crypto assets as “off-balance sheet.”
The bill garnered support from 21 Democrats and unanimous backing from 207 Republicans, resulting in a 228-182 vote in favor of passage. However, President Biden issued a statement indicating his intent to veto the bill, citing concerns about disrupting the SEC’s investor protection efforts and financial system stability.
SAB 121, introduced by the SEC in March 2022, outlines accounting guidelines for institutions holding crypto assets. Critics, including SEC Commissioner Hester Peirce, argue that the guidance discourages regulated banks from offering crypto custody services and treats crypto differently from other assets.
The House Financial Services Committee (HSFC) highlighted the bill’s potential benefits in a statement, emphasizing consumer protection and the removal of regulatory obstacles for financial institutions to act as custodians of digital assets.
HSFC Chairman Patrick McHenry criticized SAB 121 as an example of regulatory overreach during SEC Chairman Gary Gensler’s tenure.
In conclusion, while the House’s passage of the bill signifies bipartisan support for revising crypto custody regulations, President Biden’s opposition raises uncertainty about its future enactment. The ongoing debate underscores the complex regulatory landscape surrounding cryptocurrencies and their integration into traditional financial systems.
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