Biden Might Reconsider SAB 121 Vote Veto Amid Political Support for Cryptocurrency

The United States Senate, the upper house in the U.S. Congress, moved to vote in a majority today to pass a Congressional Review Act targeting the review of the Staff Accounting Bulletin No. 121 of the Securities and Exchange Commission.

On April 24, the U.S. Senate voted on H.J.Res.109 in a vote that went 60 for to 38 against, a strong statement regarding the fate of any bill in the U.S. Congress. Other than the strong support for H.J.Res 109, the vote was one of record bipartisanship, 51-49 in favor of Democrats.

A new all-time record, said U.S. Senator Cynthia Lummis, as it represented the first time a session of Congress passed a "standalone crypto legislation."

But before the bill could head to the House of Representative for a vote, President Biden had threatened to use his veto power if there was a resolution to overturn the SEC policy.

The White House said the "strongly opposes" members of the House of Representatives' efforts to disrupt the SEC's measures "to protect investors in crypto-asset markets and to safeguard the broader financial system."

So will he now carry out the threat, despite the mutiny from Democrats and with Presidential candidate Donald Trump subsequently coming out as pro-crypto? Around one-third of threatened vetoes in prior administrations were never carried out, so the threat alone does not mean a veto is a done deal.

Huge bipartisanship support for crypto-bill

For Perianne Boring, Founder and CEO of the blockchain trade association Digital Chamber, probably the most relevant thing about Congress' passage of H.J.Res. 109 was that it was passed with so much strong support.

Boring elaborated how the whole debate over SAB 121 convinced 21 Democratic Senators to cross party lines and vote in favor of the bill, ultimately passing on the votes of 12 Democratic Senators, she mentioned how Chuck Schumer was among the votes of the supporting Democratic Senators. Boring emphasized as a salient fact that "Schumer is the Senate majority leader and the second most powerful person in the country, only second to President Biden."

The former congressional staffer and television anchor detailed how the Democrats' support should have felt like a "watershed moment" for the Biden administration. She argued that Schumer's support could force the White House to "rethink its strategy and position." According to her, "the tides are turning for crypto in Washington."

The pressure for the Biden administration may go beyond the political environment since the crypto community is not the only sector that wants Biden to sign the H.J.Res. 109. The American Bankers Association has not kept silent and has openly urged "President Biden to move quickly to sign this resolution into law to help protect American consumers."

The urge comes for an economic reason as well since the banking sector has an economic incentive to offer custody services for cryptocurrencies: Banks also have a want for their piece of the pie from the ongoing retail crypto adoption.

The ball now lies in the White House court

After the wide support for the H.J.Res. 109, the Biden administration is at the crossroads of a hard choice. Biden will have to balance if it is worth it to veto the H.J.Res. 109 since it could open pressing an inner conflict in his party.

Source: White House

Is SAB 121 so crucial for the SEC that it ignites an inner battle within the Democrats when the next U.S. elections are ever so close? Biden may have to consider the pros and cons. Policy lead for Crypto Council for Innovation Patrick Kirby explained to Cointelegraph: "The President has 10 days (excluding Sundays) to sign the resolution into law, allow this to become law without signature, or veto" it. The ace up the sleeve for Biden is to "pocket veto" SAB 121.

This can occur under the circumstance that "Congress is not in session to receive either the signed or vetoed bill." Fox journalist Eleanor Terret explained to Fox that the president "could pin the resolution so that it does not turn into law because Congress is not in session." Terret believes that the strategy "could be used as a strategic way to not get too much political lashback."

However, Biden may take into account the alleged shift from Donald Trump towards a favorable crypto regulation stance for the crypto industry. Trump may have seen an opportunity that he was keen on exploiting to weigh off some support and votes going to Biden for the upcoming election on Nov. 5, 2024.

Following the SAB 121 protests, the Trump team has fast changed tack from being anti-Bitcoin to being proponents, pitching their candidate as the de facto new pro-crypto president. Kirby added that If ever the President does veto H.J.Res. 109, then nothing can stop Congress from having a re-vote. It would need a "two-thirds majority of those voting in both chambers of Congress."

About how the SEC can solve Biden's veto dilemma by nullifying SAB 121

Biden's tough dilemma of either fulfilling his veto threat may have another solution that would be of immense benefit to his administration. The SEC may decide to remove SAB 121 to avoid forcing Biden to decide whether to apply his veto.

Wiley Nickel, the Republican, mentioned how the SEC president, Gary Gensler, has in his possession the key that will end the "political football" the SEC's controversial cryptocurrency regulation measure has pitched forth and back. If the SEC removed SAB 121 from its policy, Biden wouldn't have to decide whether to veto the overturn from Congress.

SAB 121 has received criticism also within the regulatory agency. It was on May 17, 2024, when commissioner Hester Pierce explained that she felt "bad" over the SAB 121 policy.

That happened in the Blockchain Summit, Washington, hosted by The Digital Chamber. Since it was launched, the regulatory agency has received much feedback, according to Pierce, who claimed "the fact it doesn't work" and how "it keeps people out of the industry who would otherwise come into."

According to her, she believes that "it's positive" that "Congress is weighing in" on the issues of what is going to regulate the cryptos.

SAB 121 requires listed companies, including the banks, to record the crypto assets on the balance sheet as both an asset and a liability.

The SEC measure had, however, received criticism from many politicians and the various industry heads who termed the measure capable of stifling innovations as the conventional practice of treatment of asset under custody usually never appears on the balance sheet since the asset does not belong to the operator but the client.

For policy lead Kirby, this means the ability to safely protect that digital asset for consumers, a boon to financial innovation, and a "clear signal that major policy changes should go through the proper regulatory and legislative processes."

For Biden, the ball is in the SEC's court, so the next move is from them.