The U.S. President, Joe Biden has vetoed a law that aimed to overturn the controversial Staff Accounting Bulletin (SAB) 121 by the Securities and Exchange Commission (SEC).
In a letter addressed to the House of Representatives in America, President Biden reiterated his administration’s commitment towards consumers’ and investors’ protection. “Appropriate guardrails that protect consumers and investors are necessary to harness the potential benefits and opportunities of crypto-asset innovation.”
The bill to repeal SAB 121 had received bipartisan support in both chambers of Congress. The House passed the measure with 228 votes against 182 votes while at the Senate level with 60 voting for repeal and 38 against it. However, overriding a presidential veto would need a two-thirds majority from both the Senate and House.
Previously, the White House had expressed concerns about limiting the SEC’s ability to have a framework for regulating crypto assets implying that it could bring about substantial market uncertainty as well as financial instability.
SAB 121 has always provoked controversy in the crypto industry as it requires crypto firms to record the amount of customers holding in cryptocurrency as liabilities in their books. Those who are against it argue that crypto firms may find it hard to retain and secure digital assets as a result.
But SEC still considers SAB 121 “non-binding staff guidance” that improves investor disclosure. A spokesman at the SEC highlighted the risk that companies need to show with regards to concealing off-balance sheet crypto-assets, thus making the visibility into the risks taken by custodians more important for any investors.
“Time and again, we have seen crypto firms fail and watched as their customers lined up at the bankruptcy court in hopes of getting what they thought was legally theirs. ”We’ve also seen the risks to investors in firms that safeguard these assets when they are hidden off-balance sheet. These disclosures provide investors important line of sight into the level of risk taken by crypto custodians.”
The veto of President Biden has been criticized by crypto space, including many members of the Blockchain Association who expressed disappointment about the administration’s decision to overrule bipartisan majorities in both Houses of Congress.
However, there is one thing which he is categorical about: even now when cryptocurrency regulation is being discussed at length, President Biden insists on his readiness to cooperate with Congress while drafting laws related to it concerning its market segment just so long as customers and investors are not left without protection.
