Cryptocurrency regulation battle: US SEC rules spark controversy, Biden administration speaks out

Author: Turner Wright Source: cointelegraph Translation: Shan Ouba, Golden Finance

The White House issued a statement informing lawmakers and the public that the Biden administration plans to veto a joint resolution affecting the Securities and Exchange Commission's (SEC) cryptocurrency policy if it reaches the president's desk.

In a statement on May 8, the White House said they "strongly oppose" attempts by House lawmakers to pass a joint resolution that would allegedly disrupt the SEC's efforts to "protect investors in the crypto asset market and safeguard the broader financial system."

The joint resolution, H.J.Res. 109, was introduced in the House of Representatives in February and seeks to overturn the SEC's Staff Accounting Bulletin (SAB) No. 121, which requires banks to include customers' digital assets on their balance sheets and maintain capital for them.

"SAB 121 was issued in response to technological, legal, and regulatory risks that have resulted in significant consumer losses," the Biden administration said. “By invoking the Congressional Review Act, the resolution could also unduly limit the SEC’s ability to ensure adequate safeguards and address future issues related to crypto assets, including financial stability. Limiting the SEC’s ability to maintain a comprehensive and effective financial regulatory framework for crypto assets would introduce substantial financial instability and market uncertainty.” On May 8, Democratic and Republican leaders of the U.S. House Financial Services Committee took the floor to voice their views on a resolution that seeks to overturn a U.S. Securities and Exchange Commission (SEC) rule affecting cryptocurrency policy. Republican Rep. Patrick Henry urged lawmakers to support the resolution, saying the SEC’s Staff Accounting Bulletin (SAB) No. 121 allows the SEC to “govern how financial institutions and companies protect Americans’ digital assets.” Rep. McHenry said: “If you want Americans to be able to safely and securely engage in digital asset transactions, banks are probably the best way to do so, as they are some of the most heavily regulated businesses in our country.” Democratic Rep. Maxine Waters, ranking member of the House committee, opposed the joint resolution, arguing that the SEC’s accounting rules could increase transparency in the digital asset space. She reiterated the SEC’s guidance that the rules are designed to address the “unique risks and uncertainties” associated with cryptocurrencies and called McHenry’s efforts “harmful” and “partisan.”

Rep. Waters said: "This transparency can help prevent losses from fraud and mishandling of digital assets, as has been the case with the collapse of major cryptocurrency companies like FTX."

Rep. McHenry called for a roll call vote after the House considered the resolution and appeared to pass it by voice vote. The House President postponed proceedings on the resolution to a "time to be determined." Under the U.S. Constitution, the House can override President Biden's veto with a two-thirds majority vote.