Biden Admin To Kill Republican Bill Letting U.S. Banks Custody Crypto

Republican-led efforts to free up US banks to offer cryptocurrency custody services have been shut down by the Democratic-led White House.

On Wednesday, the House discussed and prepared to vote on House Resolution 109 (HJ Res. 109), which would rescind prior accounting guidance from regulators to banks that plan to offer the service to customers.

But hours before voting began, the Biden administration announced its intention to veto the resolution if it was able to pass it in the House of Representatives and the Senate.

A big blow to crypto banking in the US

As seen in the White House statementStaff Accounting Bulletin (SAB) 121 — the guidance that Republicans intend to repeal — reflects the views of Securities and Exchange Commission (SEC) staff regarding the accounting obligations of companies that protect clients' cryptocurrency assets.

“HJ Res.109 will disrupt the SEC’s work to protect investors in crypto asset markets and protect the broader financial system,” the president’s office wrote. “If the President is served with HJ Res. 109, he will veto it.”

For a bill to become law, it must usually pass through the House and Senate by a majority vote, and then be approved by the president. However, if the president chooses to veto it, the bill will only become law if it is approved by a two-thirds majority in both chambers.

Wednesday's resolution was approved in the House of Representatives, but with only 55% of the vote. All Republicans (207) voted in favor of the resolution, along with 26 Democrats.

Understanding SAP 121

According to the bill's sponsor, Mike Flood (R-Nebraska), the SEC did not consult appropriate federal banking agencies before publishing SAB 121, and took shortcuts around the traditional rulemaking process.

In fact, he and other critics describe the bulletin as a disguised “rule” rather than “guidance,” claiming that it prevents banks aiming to realistically launch crypto custody services.

“SAB 121 requires financial institutions and businesses that protect their customers’ digital assets to hold those assets on their balance sheets, making the cost of doing so prohibitive,” Financial Services Committee Chairman Patrick McHenry said in a statement. press release Wednesday afternoon.

He continued: “This decision will allow consumers to hold their digital assets in one of the safest ways possible – through highly regulated banks and other financial institutions.”