Biden May Rethink SAB 121 Vote Veto Due to Political Support for Cryptocurrencies
On May 16, 2024, a majority of the U.S. Senate passed the Congressional Review Act (CRA) to review Securities and Exchange Commission (SEC) Staff Accounting Bulletin No. 121 (SAB 121).
The U.S. Senate passed HJRes. It received 109 votes, 60 to 38, which is an unusual ratio for the U.S. Congress.
Besides excellent support for HJRes. With 109 votes, a very bipartisan vote, the Democrats won 51 to 49. According to Senator Cynthia Lummis, the vote marked a new milestone because it was the first time the council had met. pass This is a “standalone cryptocurrency bill.”
However, prior to the House vote on the bill, President Biden threatened to use his executive power to veto any resolution that would overturn SEC policy.
The White House said it “strongly opposes” efforts by House lawmakers to block the SEC’s actions “to protect investors in the crypto asset markets and protect the broader financial system.”
So will he now carry out his threat, despite the Democratic insurrection and subsequent presidential candidate Donald Trump coming forward as a cryptocurrency advocate? About a third of veto threats under previous administrations were never carried out, so a threat alone does not mean a veto is complete.
Significant support from both sides for cryptocurrency bills
Perianne Boring, founder and CEO of blockchain trade association Digital Chamber, emphasized how relevant it is that Congress passed HJRes. 109 received solid support.
Boring explained that the controversy surrounding SAB 121 resulted in 21 Democratic senators breaking ranks to support the bill, with 12 Democratic senators voting for it.
She highlighted how Chuck Schumer was among the votes of Democratic senators. Boring pointed out a related fact: “Schumer is the Senate majority leader and the second most powerful person in the United States after President Biden.”
The former congressman and television anchor explained that the Democratic endorsement should have felt like a “watershed moment” for the Biden administration. She argued that Schumer’s endorsement could force the White House to “rethink its strategy and position.” In her opinion, “the tide is turning for cryptocurrencies in Washington.”
The Biden administration may feel pressure beyond the political realm, as the cryptocurrency community is not the only sector hoping to see Biden sign HJRes. 109. The American Bankers Association has publicly urged “President Biden to act quickly to enact this resolution into law to help protect American consumers.”
The banking sector has an economic incentive to provide custody services for cryptocurrencies. Because banks also want a piece of the ongoing retail cryptocurrency adoption.
The ball is in the White House’s court
After HJRes. The Biden administration, which has received widespread support from 109 voters, must make complex decisions.
Biden will have to evaluate whether it is worth vetoing HJRes. 109 This is because there is a risk of internal conflict occurring within the party to which one belongs. Is SAB 121 really that essential for the SEC to start an internal fight within the Democratic Party so close to the next US election? Biden may have to weigh the pros and cons.
Patrick Kirby, policy director at the Crypto Council for Innovation, explained to Cointelegraph that the president has “10 days (excluding Sundays) to sign the resolution into law and either allow it to become law without his signature or veto it.”
Ace up Biden’s sleeve is to “pocket reject” SAB 121. This can happen when Congress is not in session to receive a signed or vetoed bill. Fox journalist Eleanor Terret explained how the president was able to stamp his disapproval and freeze the resolution, but it ultimately did not become law on Capitol Hill because Congress was not in session. Terret believes this “could be used in a strategic way without too much political backlash.”
However, Biden may consider claims that Donald Trump has shifted to a cryptocurrency regulatory stance that favors the cryptocurrency industry. Trump may have identified a loophole that he can exploit to throw away Biden’s support and votes in the upcoming election on November 5, 2024. As the SAB 121 challenge unfolded, Trump’s strategy quickly shifted from opposing Bitcoin to positioning himself as: Presidential candidate who supports cryptocurrency.
Kirby explained what would happen if the president finally decided to veto HJRes. Once 109 is introduced, Congress may attempt to override it. For it to succeed, it would require “two-thirds of the votes in both the House and the Senate.”
The SEC could resolve Biden’s veto dilemma by canceling SAB 121.
Biden’s difficult dilemma over whether to follow through on his veto threat may have another solution that would greatly benefit his administration.
The SEC may decide to eliminate SAB 121 to avoid forcing Biden to decide whether to override his veto. Republican Wiley Nickel expressed how SEC Chairman Gary Gensler holds the key to ending the “political football” created by the SEC’s controversial cryptocurrency regulatory actions.
If the SEC removes SAB 121 from its policy, Biden won’t have to decide whether to veto Congress’s overturn.
SAB 121 has also drawn criticism from within regulators.. On May 17, 2024, Commissioner Hester Pierce explained how she felt “bad” regarding the SAB 121 policy at the Blockchain Summit hosted in Washington by The Digital Chamber.
Pierce explained that since the program was launched, it has received a lot of feedback from regulators claiming “this isn’t working” and “it’s a way to keep people out of the industry who would otherwise come into the industry.”
SAB 121 requires listed companies, including banks, to record cryptocurrency assets as assets and liabilities on their balance sheets. Many lawmakers and industry leaders have criticized the SEC’s actions, saying they could stifle innovation. This is because this practice goes against the traditional treatment of custodial assets, which typically belong to customers and do not appear on the balance sheet.
“It is positive that Congress is considering the issue of cryptocurrency regulation,” Pierce said. For Policy Director Kirby, the vote is a “clear” victory for consumers who want to keep their digital assets safe, as well as a victory for financial innovation. “It is a signal that major policy changes must go through the appropriate regulatory and legislative processes.”
Biden, the SEC has the ball in their court, so the next move is on them.
