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Biden Vetoes Bipartisan Attempt to Repeal SEC Crypto Custody Guidelines – DL News
- Biden vetoes Republican-led bipartisan resolution.
- Wall Street banking groups had lobbied against the veto.
- Biden is “eager” to work with Congress on the regulatory framework.
US President Joe Biden on Friday afternoon vetoed a joint House resolution that would have abolished the Securities and Exchange Commission’s Staff Accounting Bulletin 121, which critics say makes it difficult for crypto firms to work with banks.
The Republican-led resolution had passed both houses of Congress with bipartisan support and was endorsed by Wall Street.
“This reversal of the SEC staff’s considered judgment risks undermining the SEC’s broader authorities regarding accounting practices,” Biden said in a declaration released by the White House.
He added: “My administration will not support measures that jeopardize the well-being of consumers and investors. Adequate guardrails that protect consumers and investors are needed to capitalize on the potential benefits and opportunities of cryptocurrency innovation.”
The SEC published SAB 121 in March 2022. Recommends that any entity that safeguards cryptocurrencies on behalf of others should place them on its balance sheet as if it owned them, DL News reported Before.
They don’t have to do this with traditional assets like stocks.
Custodians must hold capital reserves to offset risky items on the balance sheet so they can fund their positions in the event of a default. It’s expensive: the capital they are forced to hold in reserve could be tapped for revenue.
SAB 121 is unclear on how much banks should hold against cryptocurrencies, or whether the SEC would enforce it – it’s not a rule, but it’s high-level guidance.
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Uncertainty
However, the uncertainty has reportedly deterred a number of large companies, including BNY Mellon, HighwayAND Nasdaq – from entering into this business.
Wall Street’s banking and political institutions had lobbied the administration in favor of the resolution with a letterstating: “Preventing regulated banking organizations from effectively providing digital asset safeguarding services at scale harms investors, customers and, ultimately, the financial system.”
However, the White House press release on the veto goes on to say that the administration is “eager to work with Congress to ensure a comprehensive and balanced regulatory framework for digital assets.”
Drivers of the cryptocurrency market
- Bitcoin is down 1.05% today at $67,576.25.
- Today, Ethereum is up 1.03% to $3,783.16.