Biden Vetoes Resolution Overruling SEC Accounting Guidelines

In a contentious move that has ignited criticism from the cryptocurrency sector, United States President Joe Biden has vetoed a resolution aimed at overturning the U.S. Securities and Exchange Commission (SEC) Staff Accounting Bulletin (SAB) No. 121. 

The resolution had garnered bipartisan support in both houses of Congress, reflecting widespread opposition to the SEC’s directive within the legislative branch and the crypto community.

Biden Votes SAB No. 121

The SEC’s SAB No. 121, which was set to take effect on April 11, mandates that institutions holding cryptocurrency on behalf of customers must record these assets as liabilities on their balance sheets. 

This accounting treatment has been controversial, with critics arguing that it misrepresents the nature of cryptocurrency holdings and imposes unnecessary burdens on crypto custodians.

Industry and Legislative Response

Following the veto from President Biden, the Blockchain Association, a prominent crypto advocacy group, expressed its disappointment in a May 31 post on X (formerly Twitter). 

“We’re disappointed that the admin chose to overrule bipartisan majorities in both Houses of Congress who recognized the harm created by SAB 121,” the group stated. 

They, along with other critics, argue that the SEC’s guidelines stifle innovation and misinterpret the financial dynamics of digital assets.

Biden Defends His Decision

President Biden defended his decision in an official letter, asserting that overturning the SEC’s guidelines would undermine the authority of the SEC and compromise the agency’s broader regulatory oversight. 

“This reversal of the considered judgment of SEC staff in this way risks undercutting the SEC’s broader authorities regarding accounting practices,” Biden wrote. 

He emphasized his administration’s commitment to protecting consumers and investors, indicating that supporting the repeal would jeopardize their well-being.

The House of Representatives had voted to repeal the SEC’s guidance with a margin of 228 to 182, reflecting significant bipartisan opposition. The bill then moved to the Senate, where it was also passed by a notable margin of 60-38. 

Despite this clear legislative intent, the veto from President Biden marks a significant setback for those seeking to challenge the SEC’s approach to crypto asset accounting.

Broader Crypto Community Reaction

The veto has triggered a wave of frustration and criticism from the wider crypto community, who view the decision as a barrier to the growth and development of the industry. Cody Carbone, Chief Policy Officer of the Digital Chamber, voiced his discontent on X, stating, 

“This is a slap in the face to innovation and financial freedom.” Ripple CEO Brad Garlinghouse echoed these sentiments, remarking, 

“To say that this is incredibly disappointing from this White House – at an incredibly pivotal time – is an understatement.”