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Congress Pushes Back Against SEC’s Crypto Policy: Biden Faces Veto Dilemma

In a historic and highly bipartisan move, the U.S. Senate passed the Congressional Review Act (CRA) resolution H.J.Res. 109 on May 16, 2024, to review and potentially overturn the Securities and Exchange Commission (SEC) Staff Accounting Bulletin No. 121 (SAB 121). This resolution, passed by a 60 to 38 vote, signifies strong congressional opposition to the SEC’s controversial crypto regulation.



The Controversial SAB 121

SAB 121 mandates that companies, including banks, record crypto assets as both assets and liabilities on their balance sheets. Critics argue this approach stifles innovation and deters entities from entering the crypto industry, as it deviates from conventional asset custody practices.


Bipartisan Support for H.J.Res. 109

The resolution received significant bipartisan support, with a 51-49 split favoring Democrats. Notably, Senate Majority Leader Chuck Schumer was among the 21 Democratic Senators breaking ranks to support the bill, marking a potential shift in the party’s stance on crypto regulation. Senator Cynthia Lummis highlighted the vote as a milestone, noting it as the first “standalone crypto legislation” passed by Congress.



Presidential Veto Threat

Despite the strong congressional support, President Joe Biden has threatened to veto the resolution. The White House expressed firm opposition, stating that the SEC’s measures are crucial for protecting investors in the crypto market and safeguarding the broader financial system.


Political and Economic Implications

The Biden administration faces pressure from both political and economic fronts. The crypto community, bolstered by support from significant financial institutions like the American Bankers Association, urges the President to sign the resolution into law. The banking sector, eager to offer custody services for cryptocurrencies, views SAB 121 as a barrier to entering the rapidly growing crypto market.


Potential Outcomes and Strategies

President Biden has several options: he can sign the resolution, veto it, or use a “pocket veto” if Congress is not in session. A pocket veto could strategically avoid political backlash. However, if Biden chooses to veto, Congress could attempt an override, requiring a two-thirds majority in both chambers.

Alternatively, the SEC could withdraw SAB 121, relieving Biden of the need to decide. SEC Commissioner Hester Pierce acknowledged the widespread criticism of SAB 121, suggesting that its removal could benefit the industry and avoid unnecessary political conflict.


As the deadline approaches, the Biden administration must weigh the benefits and risks of maintaining SAB 121 against the bipartisan congressional support for its overturn. With the next U.S. elections looming, Biden's decision could significantly impact his political standing and the future of crypto regulation in the United States. The ball is now in the court of the White House and the SEC.



Disclaimer: The information presented in this article is based on current events and public statements as of the time of writing. It is intended for informational purposes only and should not be construed as legal, financial, or professional advice. The views expressed are those of the respective authors and do not necessarily reflect the official policy or position of any affiliated organizations or entities. Readers are encouraged to verify information independently before making decisions based on this content.


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