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Biden’s Surprise Veto Saves SEC Crypto Guidance: What’s Next for Crypto?

President Joe Biden has vetoed a congressional resolution to invalidate the SEC’s controversial Staff Accounting Bulletin 121 (SAB121). This decision has ignited a debate on the future of digital asset regulation and its impact on financial institutions. What does this mean for the crypto market and its stakeholders?

Biden Overturns Congressional Resolution

President Biden’s veto is significant in the ongoing struggle over cryptocurrency regulation. Despite bipartisan support in Congress to repeal SAB121, the president stood firm, citing the need for robust consumer and investor protections.

Issued by the SEC in 2022, SAB121 has faced heavy criticism from the crypto industry and banks for making it prohibitively expensive to offer digital asset services.

Since its introduction, SAB121 has been a contentious issue. Banks argue that the guidance prevents them from scaling up digital asset services, as the costs are too high. 

The congressional resolution to repeal SAB121 passed with notable support from 11 Democrats in the Senate and a 228-182 vote in the House. Proponents of the resolution claim that the SEC’s guidance restricts Americans’ ability to store digital assets in traditional banks, limiting their options.

Biden’s Justification

In his veto statement, President Biden emphasized the need to protect consumers and investors, stating, “My administration will not support measures that jeopardize the well-being of consumers and investors.” 

He stressed the importance of appropriately safeguarding the benefits of crypto-asset innovation responsibly. Biden also expressed his willingness to work with Congress to create a comprehensive and balanced regulatory framework for digital assets.

The White House had previously opposed House-passed legislation to create a regulatory framework for digital assets, arguing it lacked adequate consumer and investor protections. However, the administration stopped short of a full veto threat, indicating an openness to negotiate future regulations.

Reaction from Lawmakers 

In a recent tweet post, U.S. House of Representatives member Mike Flood expressed disappointment over President Biden’s veto on SAB 121 but emphasized that it isn’t the final word. He stated that digital assets and cryptocurrency are here to stay and are crucial for America’s financial future.

Flood highlighted that banks, which have long been America’s trusted custodians, should work with regulators to provide the same services for digital assets as they have for other asset classes.

He pledged to continue working with his colleagues to find ways to end SAB 121 and counter Chair Gensler’s anti-crypto agenda.

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