The House of Representatives must vote on President Joe Biden’s veto over Accounting Bulletin 121 (SAB 121) – a decision that has sparked significant controversy. The bulletin itself has caused considerable debate over the past year due to concerns in the crypto industry that it could hinder banks from effectively safeguarding their digital assets. According to this document, companies holding cryptocurrencies must record clients’ crypto liabilities as liabilities on their balance sheets.
According to the weekly schedule of House Majority Leader Steve Scalise, SAB 121 is on the list of “legislation that may be considered” and may be discussed on Tuesday or Wednesday next week. The rule requires SEC-reporting entities owning cryptocurrencies to include these holdings in their balance sheets.
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The measure received a positive vote of 228-182 in the House of Representatives in May, with the support of predominantly Republicans and 21 Democrats. A week later, the Senate voted 60 to 38, with several Democrats, including Senate Majority Leader Chuck Schumer, supporting the measure. However, to override Biden’s veto, a two-thirds majority of votes in both the House and the Senate will be necessary.
Critics argue that SAB 121 could prevent American banks from effectively managing crypto exchange-traded products on a large scale, potentially leading to a risk of concentration by giving more control to non-banking entities. Alexander Greive, head of government affairs at venture capital firm Paradigm, famously said that it is a steep hill to climb, but not impossible, considering the bipartisan support the measure received previously.
Donald Verrilli, former U.S. Solicitor General, stated that federal regulators have coordinated their actions to limit the participation of the digital asset industry in the banking sector. Verrilli filed an amicus brief with the Tenth Circuit Court of Appeals in support of Custodia Bank’s complaint against the Federal Reserve’s refusal to provide the bank access to a master account. Several other parties, including former U.S. Senator Pat Toomey and Wyoming Secretary of State Chuck Gray, have also filed briefs in support of Custodia’s complaint.
