House Fails to Override Biden’s Veto on SEC Crypto Accounting Rule
The U.S. House of Representatives fell short in its attempt to override President Joe Biden’s veto of a resolution that sought to nullify the Securities and Exchange Commission’s (SEC) controversial crypto accounting guidance, known as Staff Accounting Bulletin 121 (SAB 121). In a vote on July 11, 2024, lawmakers voted 228-184 in favor of overriding the veto, failing to reach the required two-thirds majority.
SAB 121, introduced by the SEC, requires public companies, particularly banks, to record customers’ crypto assets as liabilities on their balance sheets. This policy has drawn criticism from the crypto industry and some lawmakers who argue it could deter banks from offering crypto custody services and potentially harm consumer options.
The resolution to overturn SAB 121 initially passed both the House and Senate with bipartisan support in May. However, President Biden vetoed the measure, citing concerns that overturning the policy would “inappropriately constrain the SEC’s ability to set forth appropriate guardrails and address future issues.”
House Financial Services Committee Chair Patrick McHenry (R-N.C.) criticized the administration’s stance, stating, “This administration would rather play politics and side with power-hungry bureaucrats, over the American people and over new technology and the safe use of new technology.”
On the other side, Rep. Maxine Waters (D-Calif.) defended the SEC’s position and revealed that negotiations between the regulator and the banking industry were underway to potentially modify SAB 121. She suggested that an agreement on “targeted modifications” might be close, which could allow regulated entities like custody banks to offer crypto services consistent with the bulletin.
The failed override attempt highlights the ongoing debate over crypto regulation in the United States. While some view SAB 121 as necessary for investor protection and financial stability, others see it as regulatory overreach that could stifle innovation in the digital asset space.
