US President Joe Biden vetoed H.J. Res. 109, which aimed to overturn the of the SEC’s controversial SAB 121 rule, on May 31.
Biden wrote that SAB 121 represents the “considered technical” views of SEC staff. He added that the resolution would constrain the SEC’s ability to set guardrails and address future issues and risks — undercutting the agency’s authority over accounting practices.
He emphasized the rule’s role in protecting the public, stating:
“My Administration will not support measures that jeopardize the well-being of consumers and investors.”
Biden said his administration will work with Congress to create a “comprehensive and balanced” crypto regulatory framework that builds on existing authority and promotes innovation in the US.
Biden also highlighted a party divide in his veto statement by referring to H.J. Res. 109 as a “Republican-led resolution.”
Contrary to Biden, lawmakers backing the resolution have called the bill a bipartisan effort and urged the President not to veto the bill in a May 30 letter.
Despite the resolution’s supposed bipartisan nature, voting records demonstrate dominant Republican support for the bill. Republican lawmakers accounted for 48 of 60 yes votes in the Senate and 207 of 228 yes votes in the House of Representatives.
SAB controversy
SAB 121 requires financial institutions and firms that safeguard customer digital assets to consolidate the assets on their balance sheet and make certain disclosures.
Congressman Patrick McHenry, who supported an overturning of SAB 121, argued that the rules are effectively prohibitive. He also alleged that the SEC bypassed the Administrative Procedure Act (APA) and failed to obtain comments in making the rule.
On the other hand, Democratic senator Elizabeth Warren has argued SAB 121 is less restrictive than its critics claim. Meanwhile, the American Bankers Association (ABA) believes the rules are restrictive but desires modifications rather than a complete overturn.
Biden’s veto does not address those issues directly and only addresses a single legislative attempt to overturn SAB 121, leaving the possibility of future challenges uncertain.
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