The U.S. House of Representatives is expected to vote on major crypto legislation on Wednesday, July 10. The vote could override President Joe Biden’s veto of the Securities and Exchange Commission’s (SEC) resolution to repeal Staff Accounting Bulletin 121 (SAB 121). In June vetoed this bill. It has received a lot of attention because of its impact on the custody of Bitcoin and other crypto assets by financial institutions.
The SEC issued SAB 121 in 2022, which requires banks holding cryptocurrencies to report these assets as liabilities on their balance sheets. Many in the crypto industry have questioned this accounting treatment, arguing that the added regulatory burden discourages banks and other institutional actors from dealing with digital assets.
D-Day for crypto
The House initially passed the resolution against SAB 121 in early May by a vote of 228-182, supported by 21 Democrats in addition to unanimous Republican support. President Biden vetoed the resolution anyway. This led to the scheduling of a veto override vote, which requires a two-thirds majority in both the House and Senate to pass.
Ron Hammond of the Blockchain Association marked the unusual political dynamics at work, noting that “crypto has now become a campaign issue.” He emphasized the bipartisan nature of previous votes and pointed to the uphill battle ahead, saying, “This effort is an uphill climb, as only 21 Ds joined all Rs in support in May (drastically below the required 2/3 threshold).”
Perianne Boring of the Digital Chamber gave the discussion urgency and emphasized the need for more Democratic support: “The bill to SAB-121 is back for a vote in the House this week after POTUS vetoed it on May 31st. This constitutionally mandated vote requires a 2/3 majority to override the veto. We need approximately 60 additional House Democrats to support our bill to end SAB 121.”
Other ways
In response to the challenges of overturning the veto, discussions among lawmakers have also included alternative legislative strategies. Eleanor Terrett of Fox Business revealed via X, “I’ve heard from a Dem operative familiar with the House leaders’ thinking that they don’t expect many Democrats to change their votes on Wednesday. They see a better way to override SAB 121 through HR 5741 — the Uniform Treatment for Custodial Assets Act — a bipartisan bill introduced by U.S. Rep. Mike Flood and co-signed by Reps. French Hill, Wiley Nickel, and Ritchie Torres that addresses the accounting treatment of digital assets.”
Additionally, the House Appropriations Committee has proposed a policy clause in its budget bill that would limit the SEC from using funds to implement SAB 121. This is another approach to adjusting crypto custody regulations.
At the time of writing, Bitcoin was trading at $57,371.
Main image of Pew Research Center chart from TradingView.com