House of Representatives Approves Resolution Rejecting SEC Cryptocurrency Guidance, Biden Vows Veto

The U.S. House of Representatives made a bold move on Wednesday by voting to approve a resolution rejecting the Securities and Exchange Commission’s (SEC) controversial cryptocurrency accounting guidance. The guidance, known as Staff Accounting Bulletin No. 121 (SAB 121), has been a source of contention for the digital assets industry and Republican lawmakers since its inception.

The bulletin, which aimed to clarify the accounting treatment for crypto assets, has been criticized for potentially deterring banks from handling crypto customers due to the significant capital expenses it could incur. Rep. Mike Flood (R-Neb.), the sponsor of the resolution, accused SEC Chair Gary Gensler of using the guidance to freeze out large publicly traded banks from dealing with digital assets without consulting banking regulators.

Despite the House’s strong support for the resolution, President Joe Biden has already promised to veto the effort if it reaches his desk. In a statement, Biden expressed his opposition to disrupting the SEC’s work on the policy, citing the need to address technological, legal, and regulatory risks that have caused losses to consumers.

The resolution received bipartisan support, with 21 Democrats backing the effort despite Biden’s veto threat. However, some lawmakers, including Rep. Patrick McHenry (R-N.C.) and Rep. Maxine Waters (D-Calif.), expressed differing views on the resolution. McHenry criticized SAB 121 for deviating from traditional banking regulations, while Waters argued that the resolution went too far in undermining the SEC’s authority.

The resolution, if approved by the Senate, would not only reverse the SEC’s guidance but also block similar policies from being implemented in the future. Sen. Cynthia Lummis (R-Wyo.) is working on a matching resolution in the Senate, which would be necessary for the joint resolution to reach Biden’s desk.

The debate over SAB 121 highlights the ongoing tension between regulators, lawmakers, and the cryptocurrency industry. As the issue continues to unfold, stakeholders will be closely watching for any developments that could impact the regulatory framework for crypto-assets.