President Biden Refuses to Repeal SEC's Cryptocurrency Accounting Rule "SAB 121"

On May 31, 2024, President Joe Biden vetoed a resolution aimed at repealing the SEC's cryptocurrency accounting rule "SAB 121."

This decision highlights the administration's commitment to maintaining SEC authority and ensuring investor protection, despite significant criticism from the cryptocurrency industry.

The controversy centers on accounting guidelines that impact how companies report digital assets. With Congress needing a two-thirds majority to override the veto, the stage is set for a crucial political showdown.

Veto of the Repeal Bill for SAB 121

On May 31, 2024, U.S. President Joe Biden officially announced his decision to veto a resolution seeking the repeal of the Securities and Exchange Commission's (SEC) cryptocurrency accounting rule known as "SAB 121."

SAB 121, introduced by the SEC in March 2022, outlines accounting guidelines for institutions considering the custody of cryptocurrencies.

This guideline mandates that companies must list customer-held cryptocurrencies as liabilities on their balance sheets and evaluate corresponding assets at fair market value.

Additionally, it prohibits banks from holding cryptocurrencies on behalf of customers, a point that has sparked significant criticism.

Both the House and the Senate passed the resolution calling for the repeal of SAB 121, which was then sent to the White House. However, President Biden's official statement confirmed his veto of this bill.

Explanation: "Risk of Weakening SEC Authority"

In the official announcement, it was stated that "SAB 121 reflects the technical views of SEC staff regarding the accounting obligations of specific companies holding cryptocurrencies."

The statement emphasized that overturning the careful judgment of the SEC staff in this manner poses a risk of weakening the broad authority of the SEC in accounting practices.

President Biden also remarked, "My administration does not support measures that jeopardize the well-being of consumers and investors," stressing the need for appropriate safeguards to protect consumers and investors to leverage the potential benefits and opportunities of cryptocurrency innovation.

Reactions from the Cryptocurrency Industry

Although it was anticipated that President Biden might exercise his veto power, the official announcement has provoked numerous complaints from the cryptocurrency industry. Recently, there had been speculation that the Biden administration might shift to a more supportive stance on cryptocurrencies ahead of the next presidential election. However, this veto decision underscores the administration's continued cautious approach towards cryptocurrencies.

To override the veto, a two-thirds majority vote in both houses of Congress is required, specifically 290 votes in the House and 67 votes in the Senate. The previous voting results were reported as 228-182 in the House and 60-38 in the Senate, drawing considerable attention to future developments.