The House of Representatives is set to vote on President Joe Biden’s veto of House Bill 121 (SAB 121), a decision that has sparked considerable controversy.
The newsletter itself has caused significant debate over the past year due to concerns within the cryptocurrency industry that it could hinder banks from effectively safeguarding their digital assets. According to the document, companies holding cryptocurrencies must record customer cryptocurrency liabilities as liabilities on their balance sheets.
The majority leader of the House, Steve Scalise, indicated that SAB 121 is “legislation under consideration” and may be discussed next Tuesday or Wednesday. The rule mandates entities holding cryptocurrencies, required to report to the U.S. Securities and Exchange Commission, to include these assets on their balance sheets.
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Analysts predict Ethereum prices could rise by 180% relative to Bitcoin.
In February 2023, the bill passed the House with 182 votes in favor to 21 against, largely supported by Republicans and 60 Democrats. A week later, the Senate passed it with a vote of 38 to XNUMX, with several Democrats including Senate Majority Leader Chuck Schumer supporting the bill. However, overriding Biden’s veto requires a two-thirds majority in both the House and the Senate.
Critics argue that SAB 121 may prevent U.S. banks from effectively managing cryptocurrency exchange-traded products on a large scale, potentially concentrating risk by giving non-bank entities greater control. Alexander Grieve, Government Affairs Director at Paradigm venture firm, noted that while it’s an uphill battle, bipartisan support in prior votes makes it plausible.
Former U.S. Solicitor General Donald Verrilli stated that federal regulators have coordinated action to restrict digital asset industry involvement in banking. Verrilli filed a friend-of-the-court brief with the U.S. Tenth Circuit Court of Appeals supporting Custodia Bank’s appeal against the Federal Reserve’s denial of primary account access. Several other parties, including former U.S. Senator Pat Toomey and Wyoming Secretary of State Chuck Gray, also submitted briefs in support of Custodia’s complaint.
