Announcing he "will not support measures that jeopardize the well-being of consumers and investors," President Biden vetoes SAB 121 - a resolution enabling regulated banking groups to offer crypto custody services

On May 31, 2024, President Joe Biden vetoed House Joint Resolution 109, a bipartisan measure passed under the Congressional Review Act that would have overturned the U.S. Securities and Exchange Commission’s Staff Accounting Bulletin 121 (SAB 121). SAB 121, issued in 2022, requires public companies that safeguard cryptoassets for customers—especially banks and other potential custodians—to record those assets on their own balance sheets as liabilities, along with extensive related disclosures. Banking and financial industry groups argued this treatment is a major deterrent to offering digital asset custody, because it increases regulatory capital requirements and diverges from the traditional off-balance-sheet accounting used for other custodial assets. In his veto message to the House, Biden said the resolution would “inappropriately constrain the SEC’s ability to set forth appropriate guardrails and address future issues” and warned that reversing the bulletin via the CRA could undercut the SEC’s broader authority over accounting practices. The Government Accountability Office had previously found that SAB 121 functioned as a rule that should have been submitted to Congress, but the veto left the bulletin in place and maintained what banks describe as a de facto barrier to entering crypto custody at scale. The episode highlighted a clear policy divide: the administration prioritized regulatory flexibility and investor protection through the SEC, while many lawmakers and banking groups contended that keeping SAB 121 would push crypto users toward less regulated non-bank platforms and limit the availability of traditional, prudentially supervised institutions in the digital asset custody market.

✨ AI-generated background, compiled from web sources — not editorial content.

More coverage

• Biden Vetoes SAB 121 Crypto Resolution - Zerocap (zerocap.com)
• Bank crypto custody blocker remains after Biden vetoes SAB 121 ... (ledgerinsights.com)
• Biden vetoes resolution to overturn SEC treatment of crypto custody ... (bankingjournal.aba.com)
• Trump Signs Pro-Crypto Order; SEC Repeals SAB 121 and Forms ... (manatt.com)
• Digital Asset Executive Order and SAB 121 Rescission | Insights (jonesday.com)

Explore the topic

• Biden
• Crypto
• Custody