The Securities and Exchange Commission’s SAB 121 regulations on digital assets could be overturned as the U.S. House of Representatives has passed H.J. Res. 109, a resolution aimed at reducing regulatory burdens and promoting safer custodianship of digital assets by regulated banks. However, the White House has issued a veto threat, backing the SEC and emphasizing that President Joe Biden would veto the resolution if presented with it.
In a bipartisan move, the U.S. House of Representatives passed H.J. Res. 109 on Wednesday, with the aim of repealing the SEC’s Staff Accounting Bulletin No. 121 (SAB 121). The resolution seeks to eliminate excessive regulatory burdens imposed on financial institutions and firms that act as custodians of digital assets.
The House Financial Services Committee clarified that H.J. Res. 109 uses the Congressional Review Act (CRA) to overturn the SEC’s SAB 121. By doing so, the bipartisan resolution ensures consumer protection by removing obstacles that prevent highly regulated financial institutions and firms from serving as custodians of digital assets.
Chair of the House Financial Services Committee, Patrick McHenry (R-NC), criticized the SEC’s regulatory overreach under Gary Gensler’s leadership, describing SAB 121 as a prime example. He explained that the regulation requires financial institutions and firms holding customers’ digital assets to include them on their balance sheets, making it prohibitively expensive. The resolution aims to allow consumers to safely hold their digital assets through highly regulated banks and other financial institutions.
However, the White House has expressed opposition to H.J. Res. 109. In a Statement of Administration Policy released on Wednesday, it argued that the resolution would undermine the SEC’s ability to protect investors and maintain financial stability in the crypto-asset markets. The statement emphasized that limiting the SEC’s capacity to regulate crypto-assets would introduce financial instability and market uncertainty. The White House made it clear that if President Biden were presented with H.J. Res. 109, he would veto it.
What are your thoughts on the U.S. House of Representatives’ decision to overturn the SEC’s SAB 121 regulations, especially as President Biden threatens to veto the resolution? Feel free to share your opinions in the comments section below.
