The U.S. House of Representatives repeals crypto-unfriendly SEC accounting rules! But Biden vowed to veto it

The U.S. House of Representatives formally passed a resolution in favor of the cryptocurrency industry earlier today (9th). The resolution aims to reject the U.S. Securities Commission (SEC)’s 2022 resolution on Employee Accounting Bulletin for Custody and Recognition of Crypto Assets (SAB121). However, U.S. President Biden immediately issued a statement saying that he would veto the resolution if it reached his desk.

SAB121, which has been criticized by the cryptocurrency industry and Republican lawmakers since its announcement, requires financial institutions that have custody of customers’ crypto assets to include crypto assets on their balance sheets, which could generate a large amount of Capital expenditures have therefore been questioned by the industry and some lawmakers. This announcement will harm banks' willingness to serve as cryptocurrency custodians, and the SEC's stance on crypto asset positions is clearly inconsistent with other assets.

This announcement was deemed a "violation" by the U.S. Government Accountability Office (GAO) at the end of October last year, requiring the SEC to comply with the "Congressional Review Act" and submit a report on the matter to the House of Representatives, the Senate and the Comptroller General. The report on the rules is subject to congressional review.

The House of Representatives passed a resolution to repeal SEC crypto asset accounting rules

According to reports from "Coindesk" and "The Block", the House of Representatives passed a resolution to overturn SAB 121 today with a vote of 228 in favor and 182 against. It received support from 207 Republicans and 21 Democrats voted in favor.

The resolution to reject the SEC guidance was co-sponsored by Republican Rep. Mike Flood and two Democrats. Flood had previously sharply criticized SEC Chairman Gary Gensler for passing what should have been a common law in the jihad against digital assets. Employee Accounting Guidelines, but the underlying purpose is to prevent large listed banks from custody of digital assets, but they did not consult banking regulators on this matter, which is a risk of overstepping their authority.

Now, SAB121 has been rejected by the House of Representatives. The next step should be submitted to the Senate Banking Committee, and then voted by the full Senate before being sent to the president’s desk for signature and approval. It is understood that Republican Senator Cynthia Lummis, a well-known crypto-friendly party, has been pushing for a matching resolution in the Senate, which is a necessary measure required before the joint resolution can pass a vote in both chambers.

Cody Carbone, vice president of policy at the U.S. Digital Chamber of Commerce, said he expects the bill to repeal SAB 121 will pass the Senate, where the resolution could come up for a vote before Congress recesses in August.

Biden supports the SEC: will veto the resolution

However, even if the resolution is passed by both houses of Congress, Biden emphasized in a statement issued by the White House this morning that he would "veto it" today "The resolution fully demonstrates his support for the SEC in its words: SAB121 was released in response to proven technical, legal, and regulatory risks that have caused significant losses to consumers. I strongly oppose "disrupting" the SEC in this regard. work. By invoking the Congressional Review Act, the SEC may unduly limit the SEC’s ability to ensure appropriate guardrails and address future issues related to crypto-assets, including financial stability. Limiting the SEC’s ability to maintain a comprehensive and effective financial regulatory framework for crypto-assets will bring severe financial instability and market uncertainty.

It’s important to note that when an agency rule is overturned under the Congressional Review Act, not only is it repealed, but any similar rule can never be implemented in the future, leaving House Finance Maxine Waters, the Democratic leader of the Services Committee, expressed her strong opposition to the resolution. She praised SAB 121 for helping to provide transparency and in turn prevent the fraud that has led to the collapse of cryptocurrency companies such as FTX. She also warned that overturning SAB 121 may in the future Limit the SEC’s power to regulate and guide cryptocurrency companies.

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