Just hours before President Joe Biden exercised his veto power to block the repeal of Staff Accounting Bulletin (SAB) 121 on May 31, the American Bankers Association (ABA), the largest lobbying organization for the U.S. banking industry, made a last-ditch effort to influence his decision.
In a letter to Biden, the ABA argued that preventing regulated banking organizations from effectively offering digital asset safeguarding services on a large scale would harm investors, customers, and the overall financial system. This plea came right before Biden announced his decision to veto the Congressional resolution seeking to repeal the U.S. Securities and Exchange Commission (SEC) SAB 121 guidelines.
Despite both the House of Representatives and the Senate voting in favor of repealing the SAB 121 guidance, Biden decided to exercise his presidential veto authority, effectively blocking the repeal.
The ABA explained that the SAB 121 represents a significant departure from the traditional accounting treatment for custodial assets, making it more challenging for the industry to ensure the safety of digital assets for customers.
Interestingly, the ABA’s pro-crypto statement may come as a surprise to those in the crypto industry, considering the group’s reported involvement in assisting Senator Elizabeth Warren, who has expressed skepticism towards cryptocurrencies, in drafting anti-crypto legislation. In 2023, a video surfaced in which Roger Marshall admitted that he and Warren sought the ABA’s help in crafting the Digital Asset Anti-Money Laundering Act.
The ABA emphasized that limiting banks’ ability to offer digital asset safeguarding services would leave customers with few well-regulated and trusted options, ultimately exposing them to increased risk.
Overall, the ABA’s letter and Biden’s subsequent veto have highlighted the ongoing debate surrounding the regulation of digital assets and the role of banks in providing custodial services for cryptocurrencies.