Controversial SEC Crypto Rules Slated for Veto by Biden Administration

By: Eva Baxter

The Biden administration has voiced its intentions to veto H.J. Res. 109, a resolution seeking to overturn the Securities and Exchange Commission's (SEC) Staff Accounting Bulletin 121 (SAB 121) - a set of controversial cryptocurrency regulations. The administration stands in staunch opposition to the resolution, asserting that revoking SAB 121 would hinder the SEC's efforts to safeguard the financial system and protect cryptocurrency market investors.

The resolution has garnered some support among lawmakers, including Patrick McHenry, Chairman of the House Financial Services Committee, who voiced concern about the SEC using guidance requirements to avoid the public commenting and rule-making processes mandated by the Administrative Procedure Act (APA).

SAB 121 places stringent regulations on financial institutions and firms handling customer cryptocurrencies. However, it's seen as unfavorable by some within the banking industry, due to its inability to differentiate between cryptos on public ledgers and traditional assets on permissioned ledgers, among other issues. Despite criticisms, the American Bankers Association (ABA) requests modification of SAB 121 instead of complete revocation.

As the U.S. House of Representatives is set to vote on the issue, the administration's staunch position has set the stage for a potential veto if the resolution is passed.