- The U.S. House of Representatives failed to override President Biden’s veto of the SAB121 resolution.
- The SEC has reportedly made concessions regarding cryptocurrency accounting for banks and brokerage firms.
The U.S. House of Representatives failed to override President Joe Biden’s cryptocurrency veto of SEC accounting guidelines.
SEC accounting guidelines; Staff Accounting Bulletin 121 [SAB 121]was not reversed after the U.S. House of Representatives failed to achieve the two-thirds majority vote needed to override President Biden’s veto on Thursday.
Responding to the unfortunate update, Christine Smith, CEO of cryptocurrency advocacy group Blockchain Association, said: Said,
“It is unfortunate that the resolution to override the President’s veto of the bipartisan SAB 121 Congressional Review Bill did not receive the two-thirds majority necessary for passage, but the fight to block this ill-conceived SEC rule will continue.”
Biden Reportedly Concessions on Cryptocurrency Veto
SAB 121 is the SEC’s response to mitigate events such as the FTX incident and related platform risk. According to the SEC, the bill was intended to address the issue of users’ funds being locked during bankruptcy proceedings.
As a result, the guidance states that companies that deal with cryptocurrencies, particularly banks, will be required to include cryptocurrencies as assets and liabilities on their balance sheets, which could expand their capital requirements.
However, market observers say SAB 121 will mean increased risk, compliance and operational costs for most banks wanting to get into the crypto custody business.
This means that some of the biggest banks, such as JP Morgan, Citi, and New York Mellon, cannot offer crypto custody services like Coinbase.
Having a limited number of custodians of crypto assets can also increase concentration risk.
Given these challenges, the U.S. Congress voted bipartisanly in both the House and Senate to reject the SAB 121 policy.
But Biden vetoed the resolution in May. state that,
“To harness the potential benefits and opportunities presented by cryptocurrency innovation, appropriate guardrails must be in place to protect consumers and investors.”
However, opponents of SAB 121 are likely to see some reported concessions made to accommodate securities firms and banks.
According to a recent Bloomberg article: reportThe SEC will likely grant certain concessions regarding cryptocurrency accounting compliance.
This means that banks and certain brokerages may be able to avoid strict balance sheet reporting requirements for crypto custodians.
It remains to be seen whether other large traditional banks and brokerages such as JP Morgan, BNY Mellon, and others will enter the crypto custody business as a result of these reported concessions.
