President Biden Exercises Veto Power to Uphold SEC's Crypto Regulatory Stance

In a move that underscores his administration's commitment to robust regulatory oversight in the rapidly evolving digital asset space, President Joe Biden has exercised his veto power to nullify a bipartisan-passed resolution seeking to curtail the Securities and Exchange Commission's (SEC) authority over crypto custody services offered by financial institutions.

The resolution, passed by the U.S. House of Representatives in a 228-182 bipartisan vote and subsequently approved by the Senate with a 60-38 margin, aimed to rescind the SEC's Staff Accounting Bulletin (SAB) 121, which critics argued had the unintended consequence of discouraging banks from offering crypto custody services.

In his veto notice to Congress, President Biden defended the SEC's "considered judgment" and expressed concerns that the resolution could "undercut the SEC's broader authorities regarding accounting practices." He emphasized that his administration would not support measures that jeopardize the well-being of consumers and investors in the rapidly evolving digital asset market.

The president's veto message stated, "This reversal of the considered judgment of SEC staff in this way risks undercutting the SEC's broader authorities regarding accounting practices. My Administration will not support measures that jeopardize the well-being of consumers and investors. Therefore, I am vetoing this resolution."

The controversy surrounding SAB 121 has been brewing for over a year, with President Biden signaling his intent to veto the legislation on the day it was passed by the House of Representatives. The Senate's subsequent approval of a companion resolution, which saw 12 Democrats joining most Republicans in voting to repeal the policy, further escalated the tensions.

In his veto notice, President Biden criticized the resolution's reliance on the Congressional Review Act as the basis for the oversight claimed by lawmakers in their objections. He stated, "This Republican-led resolution would inappropriately constrain the SEC's ability to set forth appropriate guardrails and address future issues."

While exercising his veto power on SAB 121, President Biden signaled a willingness to work with Congress on developing a "balanced regulatory framework for digital assets." This aligns with the stated goal of the Financial Innovation and Technology for the 21st Century Act (FIT21), which the president has not explicitly threatened to veto, despite his opposition to certain provisions.

The announcement comes amid heightened political tensions surrounding the digital asset landscape, with former President Donald Trump, a potential Republican rival in the upcoming presidential election in November 2024, pivoting to court the crypto vote as it becomes an increasingly potent campaign issue.