US President Joe Biden Vetoes Overturn of SAB 121

US President Joe Biden has vetoed congressional resolution H.J. Res.109, which seeks to repeal the US Securities and Exchange Commission (SEC) Staff Accounting Bulletin (SAB) No.121, a controversial guidance measure that is widely viewed as anti-crypto. Interestingly, Biden’s action comes amidst rumors that the incumbent government was posturing to gain the favor of crypto voters in the coming US general elections.

SAB 121 Repeal To Jeopardize Investors’ Interest, Biden Says

On March 31, 2022, the SEC introduced SAB 121 which directed all financial institutions that custody cryptocurrencies for clients to consolidate these assets on their balance sheet thus precluding these firms from safeguarding such digital assets. 

SAB 121 received much criticism for its perceived anti-crypto nature. It was also perceived as controversial guidance that allowed the SEC to bypass the normal steps in its rulemaking policy which often included comments from relevant stakeholders on any proposed regulation.

Earlier in May, the US Congress passed a repeal of SAB 121 with the House voting 228-182 and the Senate, 60-38, in favor of overturning the SEC’s staff accounting bulletin. However, Biden has now rejected this resolution citing several reasons.

Firstly, Biden stated that the repeal of the said guidance would “inappropriately” undermine the SEC’s ability in terms of setting the right regulatory systems and resolving future issues. In addition, the US President said the proposed resolution could expose US investors to certain harms and risks. 

Biden said: 

My Administration will not support measures that jeopardize the well-being of consumers and investors. Appropriate guardrails that protect consumers and investors are necessary to harness the potential benefits and opportunities of crypto-asset innovation.

The President also commented on the lack of clear federal rules and regulations for the crypto space. He said: 

My Administration is eager 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 system.

Biden Government Back To ‘Default’ Crypto Policy?

Amidst the sudden approval of the Ethereum spot ETF among other events, there were speculations the current administration could be softening its stance on the use of digital assets. However, Biden’s recent action is likely to cast doubt on such beliefs.

It is widely expected that US crypto users (valued at 46 million) will be looking to make an impact at the polls in October in order to protect their interests amidst the current hostile regulatory regime.

Whether the Biden government intends to persuade these voters remains largely to be seen, however, former President Donald Trump, Biden’s direct opposition and an ex-Bitcoin critic has begun to advocate for cryptocurrency development in the US.