House of Representatives Passes Bill Overturning SEC Guidance on Bank Ownership of Crypto, President Biden Threatens Veto

The United States House of Representatives has made a bold move by voting to pass a bill that overturns controversial Securities and Exchange Commission (SEC) guidance preventing banks from owning crypto assets. The bill, titled H.J. Res 109, aims to reverse the SEC’s Special Accounting Bulletin 121 (SAB 121), which required banks to hold their customers’ crypto assets on their balance sheets, unlike traditional assets such as securities.

The bipartisan bill received support from both Republican and Democratic members of the House, with 21 Democrats joining 207 Republicans in voting for its passage. However, President Joe Biden has issued a warning that he would veto the bill if it were to reach his desk.

The White House released a statement on May 8 expressing strong opposition to the bill, stating that overturning SAB 121 would disrupt the SEC’s efforts to protect investors in the crypto-asset markets and safeguard the broader financial system. The White House argued that limiting the SEC’s ability to regulate crypto-assets could introduce financial instability and market uncertainty.

Introduced by the SEC in March 2022, SAB 121 has been criticized by U.S. lawmakers and SEC Commissioner Hester Peirce for hindering regulated banks from acting as custodians of crypto assets. The House Financial Services Committee (HFSC) praised the bipartisan resolution for removing roadblocks that prevent financial institutions from offering crypto custody services to consumers.

The debate over SAB 121 highlights the ongoing regulatory challenges facing the crypto industry, with stakeholders advocating for a more balanced approach to regulating digital assets. As this story continues to develop, further updates will be provided.