President Joe Biden recently vetoed H.J. Res. 109, stating that the SEC’s SAB 121 rule reflects the expert opinions of SEC staff. He expressed concerns that overturning the rule would limit the SEC’s ability to regulate and address potential risks, ultimately undermining consumer and investor protection.
The Call for a Balanced Regulatory Framework
In his veto statement, President Biden mentioned the need for a comprehensive and balanced regulatory framework for cryptocurrencies. He emphasized the importance of building upon existing authority while fostering innovation in the United States. This indicates a forward-looking approach to regulating the rapidly evolving crypto industry.
Political Divide on the Veto
President Biden highlighted a partisan divide by referring to H.J. Res. 109 as a “Republican-led resolution.” However, supporters of the resolution argued that it was a bipartisan effort. Despite claims of bipartisanship, voting records revealed significant Republican support for the bill, both in the Senate and the House of Representatives.
Differing Views on SAB 121
Congressman Patrick McHenry, who advocated for overturning SAB 121, criticized the rule as overly restrictive. He alleged that the SEC did not follow proper procedures in implementing the rule, sparking concerns about due process. On the other hand, Democratic Senator Elizabeth Warren defended SAB 121, arguing that it is not as restrictive as its critics suggest.
The American Bankers Association (ABA) believes that while SAB 121 is restrictive, it should be revised rather than completely overturned. This nuanced approach reflects the complexities of regulating digital assets and balancing innovation with consumer protection.
President Biden’s veto only addressed one legislative attempt to overturn SAB 121, leaving the door open for future challenges to the rule. The lack of direct resolution to the underlying issues surrounding SAB 121 introduces uncertainty regarding the future of financial institutions and firms that deal with customer digital assets.
