Reactions Post Veto of SEC Bulletin by US President

The recent decision by the U.S. President, Joe Biden, to veto a law aimed at overturning the contentious Staff Accounting Bulletin (SAB) 121 issued by the Securities and Exchange Commission (SEC) has triggered diverse reactions and discussions within the financial and crypto communities.

In a formal correspondence to the House of Representatives, President Biden reiterated his administration's staunch commitment to protecting the rights and interests of consumers and investors. Stressing the importance of establishing regulatory guardrails to facilitate the positive impacts and advancements stemming from crypto-asset innovation, the President underscored the necessity of ensuring a secure financial environment.

The bill advocating for the repeal of SAB 121 garnered bipartisan support across both the House and Senate chambers. Despite the successful passage in the House with a vote count of 228 in favor and 182 against, and a split verdict in the Senate with 60 supporting the repeal and 38 opposing, President Biden's veto highlights the significance of upholding the SEC's regulatory directives regarding crypto assets.

Prior concerns raised by the White House centered on the potential risks associated with constraining the SEC's oversight on crypto assets, emphasizing the importance of market stability and financial predictability. SAB 121, known for its controversies in the crypto sphere, mandates crypto firms to treat customers' cryptocurrency holdings as liabilities, prompting discussions on asset security and management.

Contrary to opposing views, the SEC views SAB 121 as 'non-binding staff guidance' aimed at improving transparency for investors. The emphasis on companies revealing risks associated with off-balance sheet crypto-assets underscores the significance of providing investors with a comprehensive view of custodial risks.

The veto decision by President Biden has been met with mixed reactions, with criticism emerging from various quarters, including the Blockchain Association, expressing disappointment over the administration's deviation from the bipartisan consensus reached in Congress.

In the ongoing debates regarding cryptocurrency regulation, President Biden remains open to collaborating with Congress to enact legislation pertaining to the market sector, ensuring that customer and investor protection remains a top priority.