White House Rejects Resolution to Allow US Banks to Provide Crypto Custody Services

According to CryptoPotato, a Republican initiative to allow US banks to offer crypto custody services was rejected by the Democrat-led White House. The House of Representatives was set to vote on House Resolution 109 (H.J. Res. 109), which aimed to overturn previous accounting guidelines for banks intending to offer this service. However, the Biden Administration announced its intention to veto the resolution if it passed both the House and Senate. The White House's statement explained that Staff Accounting Bulletin (SAB) 121, which Republicans sought to invalidate, represents the views of the Securities and Exchange Commission (SEC) staff on the accounting responsibilities of firms safeguarding customers' crypto assets. The Office of the President stated that H.J. Res.109 would interfere with the SEC's efforts to protect investors in crypto-asset markets and safeguard the broader financial system. The President would veto H.J. Res. 109 if it were presented to him. For a bill to become law, it typically needs to pass both the House and Senate with a majority vote and then receive the President's approval. If the President vetoes it, the bill can only become law if it secures a two-thirds majority vote in both chambers. The resolution passed the House with 55% of the vote, with all Republicans and 26 Democrats voting in favor. Mike Flood (R-Nebraska), the sponsor of the act, argued that the SEC did not consult the appropriate Federal banking agencies before publishing SAB 121, bypassing the traditional rulemaking process. Critics have described the bulletin as a disguised 'rule' rather than 'guidance,' claiming it hinders banks' ability to realistically offer crypto custody services. Financial Services Committee chair Patrick McHenry stated that SAB 121 requires financial institutions safeguarding customers' digital assets to hold those assets on their balance sheet, making it cost prohibitive. He argued that the resolution would allow consumers to hold their digital assets in one of the safest ways possible—through highly regulated banks and other financial institutions.