The office of United States President Joe Biden has released a statement stating that his administration intends to veto a joint resolution that would impact crypto policy at the Securities and Exchange Commission (SEC), should it reach his desk.
In a statement issued on May 8, the White House expressed strong opposition to members of the House of Representatives who are trying to pass a joint resolution that it claims would disrupt the SEC’s efforts to protect investors in crypto-asset markets and ensure the stability of the broader financial system. The resolution in question, H.J.Res. 109, was introduced in the House in February and seeks to overturn the SEC’s Staff Accounting Bulletin (SAB) No. 121. This bulletin requires banks to include customers’ digital assets on their balance sheets, along with the necessary capital reserves.
The Biden administration explained that SAB 121 was implemented in response to demonstrated technological, legal, and regulatory risks that have resulted in significant consumer losses. The administration argued that invoking the Congressional Review Act to overturn the bulletin could improperly limit the SEC’s ability to establish appropriate regulations and address future issues related to crypto-assets, including financial stability. Restricting the SEC’s ability to maintain a comprehensive and effective regulatory framework for crypto-assets could introduce significant financial instability and market uncertainty.
Democratic and Republican leaders from the House Financial Services Committee voiced their opinions on the resolution during a session on May 8. Representative Patrick Henry, a Republican, urged lawmakers to support H.J.Res. 109, claiming that SAB 121 allowed the SEC to dictate how financial institutions and firms safeguard Americans’ digital assets. He argued that banks, which are highly regulated businesses, are best positioned to ensure the safe and secure engagement of Americans with digital assets.
Representative Maxine Waters, a Democrat and ranking member of the House committee, opposed the joint resolution, arguing that the SEC’s accounting rule provided greater transparency in the digital asset space. She reiterated the SEC’s claim that the rule was designed to address the unique risks and uncertainties associated with cryptocurrencies. Representative Waters criticized Representative McHenry’s efforts as harmful and partisan, stating that transparency is crucial in preventing fraud and mishandling of crypto assets, which can lead to major collapses like that of FTX.
During the House session, H.J.Res. 109 appeared to pass by a voice vote, but Representative McHenry called for a count of the yeas and nays. The House chair postponed further proceedings on the resolution until a later time. According to the U.S. Constitution, the House could override President Biden’s veto with a two-thirds majority vote.
In related news, U.S. enforcement agencies are increasing their efforts to combat crypto-related crime.