US lawmakers failed to overturn SAB121 bill, vetoed by Biden

U.S. lawmakers voted 228-184 but failed to override President Joe Biden’s veto on a measure to overturn a controversial crypto accounting bulletin.

A two-thirds majority of both houses needed to override the veto. In the House, 21 Democrats and 207 Republicans voted yes, while 183 Democrats and one Republican voted no.

What is Controversial SAB 121

Staff Accounting Bulletin No. 121 (SAB 121) requires firms that custody crypto to record customer holdings as liabilities. This has raised concerns in the crypto industry about banks safeguarding digital assets.

Failure to overturn SAB 121 resolution

Reps. Mike Flood and Wiley Nickel introduced the resolution to overturn SAB 121. The House voted 228-182 in May, followed by a Senate vote of 60-38. Despite this, President Biden vetoed the resolution.

The White House stated the administration’s opposition, citing the SEC’s role in protecting investors and the financial system. The SEC described SAB 121 as non-binding guidance that enhances investor disclosures.

SEC’s Position

An SEC spokesperson emphasised the importance of transparency in crypto custody risks. The spokesperson highlighted past failures of crypto firms and the subsequent impact on customers.

Whether to overthrow SAB121 has mixed reviews

House Financial Services Committee Ranking Democrat Maxine Waters criticised the attempt to overturn SAB 121, noting ongoing negotiations between a special interest group and the SEC to refine the bulletin.

House Financial Services Committee Chair Patrick McHenry remarked that the vote was the first digital assets-specific legislation to pass both chambers. He criticised the administration for prioritising politics over technological advancement.

U.S. lawmakers failed to override President Biden’s veto on a measure to overturn SAB 121, leaving the controversial crypto accounting guidance in place. The administration and the SEC defend SAB 121 as crucial for investor protection, while critics argue it hampers crypto innovation.