Biden's surprise veto saves the SEC directive, a disappointment for crypto!

U.S. President Joe Biden has vetoed a Congressional resolution aimed at invalidating the controversial “Staff Accounting Bulletin 121” (SAB121) of the Securities and Exchange Commission (SEC). This unexpected decision reignites the debate on crypto regulation and its impact on financial institutions.

SAB121: A Controversial Directive at the Heart of the Debate 

Published by the SEC in March 2022, the SAB121 requires banks and other entities holding crypto assets on behalf of their clients to account for them as liabilities on their balance sheets.

From its publication, this directive has sparked strong opposition from the crypto industry and the banking sector, who argue that it imposes exorbitant compliance costs, thus hindering the offer of services related to digital assets.

In response, members of Congress from both parties introduced a resolution aimed at repealing SAB121. On May 9, 2024, 11 Democratic senators supported this resolution, and the House of Representatives passed it by 228 votes to 182.

However, President Biden vetoed this resolution, citing in his statement the need to effectively protect consumers and investors while preserving the benefits of innovation in the crypto field.

Critics of SAB121 from both parties in Congress argue that this measure, still in effect today, restricts Americans’ ability to keep their crypto assets in traditional banks.

Towards a Comprehensive Regulatory Framework 

Biden’s veto does not close the debate on crypto regulation. The administration has expressed its readiness to work with Congress to develop a comprehensive and balanced regulatory framework for digital assets.

Legislators such as Representative Mike Flood, disappointed by the president’s decision, highlight the crucial role of cryptos in the financial future of the United States. They call on banks, as trusted custodians, to work hand in hand with regulators to offer services tailored to digital assets, similar to those offered for other asset classes.

As the debate continues, it becomes clear that finding the right balance between fostering innovation and protecting investors will be essential. The crypto industry, regulators, and legislators will need to join forces to shape a regulatory environment conducive to responsible and sustainable growth of this constantly evolving sector.