The United States House of Representatives has voted to pass a bill that overturns controversial Securities and Exchange Commission guidance preventing banks from owning crypto.
President Joe Biden, however, warned earlier in the day that he would veto the new bill if it were to make it to his desk.
On May 8, the House voted to pass a bipartisan bill dubbed H.J. Res 109 which overturns the SEC’s Special Accounting Bulletin (SAB 121) that requires banks to hold their customers’ crypto assets on their balance sheets — which is not the case for traditional assets such as securities.
Republican Congressman Mike Flood — the lawmaker who introduced the resolution — said SAB 121 was unfair for banks looking to custody crypto, as custodial assets are “always considered off-balance sheet."
Notably, 21 Democrats voted in favor of the bill — which combined with the unanimous 207 votes from Republicans — saw the bill pass 228 votes to 182.
Despite the bill being passed through the House of Representatives, President Joe Biden stated he will veto the new bill.
Related: US lawmakers argue SEC accounting policy places crypto customers at risk
In a May 8 statement, the White House said it “strongly opposes” members of the House of Representatives looking to overturn SAB 121, claiming it would disrupt the SEC’s efforts “to protect investors in crypto-asset markets and to safeguard the broader financial system.”
Limiting the SEC’s ability to maintain a comprehensive and effective financial regulatory framework for crypto-assets would introduce substantial financial instability and market uncertainty.
Introduced by the SEC in March 2022, SAB 121 outlines the regulator’s accounting guidelines for institutions looking to custody crypto assets. Notably, SAB 121 virtually prevents banks from custodying crypto assets on behalf of clients.
U.S. lawmakers including SEC Commissioner Hester Peirce have argued SAB 121 jeopardizes the willingness of regulated banks to act as crypto custodians and treats crypto holdings differently than other assets.
"By overturning SAB 121, the bipartisan resolution ensures consumers are protected by removing roadblocks that prevent highly regulated financial institutions and firms from acting as custodians of digital assets," wrote the House Financial Services Committee (HSFC) in a May 8 statement.
“Staff Accounting Bulletin 121 is one of the most glaring examples of the regulatory overreach that has defined Gary Gensler’s tenure at the SEC,” said HSFC Chairman Patrick McHenry.
This is a developing story, and further information will be added as it becomes available.
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