In a joint effort, the American Bankers Association, Bank Policy Institute, Financial Services Forum, and Securities Industry and Financial Markets Association have reached out to President Joe Biden on May 31, urging him to affix his signature to the resolution that has been approved by Congress. This resolution aims to overturn the SEC’s Staff Accounting Bulletin 121 (SAB 121), which the associations argue was released without any regulatory consultation or public input. SAB 121 mandates that public companies must include user-safeguarded digital assets on their balance sheets, diverging from the conventional off-balance sheet treatment. The associations assert that this requirement hampers regulated banking organizations from offering digital asset custody services on a large scale due to increased capital and liquidity requirements.
According to the associations, SAB 121 has a detrimental impact on investors and customers as it limits their access to secure and regulated custody options, restricts banks from exploring potential use cases for distributed ledger technology, and creates an unlevel playing field with non-bank entities. The letter was apparently dispatched to President Biden shortly before he exercised his veto power against the resolution. However, there is still a possibility for the resolution to pass and become law if Congress overrides the veto. This would necessitate a two-thirds majority vote in both the House of Representatives and the Senate. If such a supermajority is achieved in both chambers, the resolution will prevail as law despite the president’s veto.
