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US House to Vote on Overturning Biden’s SAB 121 Crypto Accounting Veto

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TLDR

  • The US House of Representatives may vote this week to overturn President Biden’s veto of a bill that would eliminate the SEC’s Staff Accounting Bulletin (SAB) 121.
  • SAB 121 requires companies to label digital assets held for customers as liabilities on their balance sheets.
  • The original bill to curb SAB 121 passed the House with a 228-182 vote and the Senate with a 60-38 vote.
  • To override the presidential veto, a two-thirds majority is required in both the House and Senate.
  • Other key events this week include the release of US CPI and PPI data, and Federal Reserve Chair Jerome Powell’s testimony before the House Financial Services Committee.

The US House of Representatives is gearing up for a crucial vote this week that could have significant implications for the cryptocurrency industry.

The House is set to decide whether to overturn President Joe Biden’s veto of a bill that would eliminate the Securities and Exchange Commission’s (SEC) Staff Accounting Bulletin (SAB) 121.

SAB 121, issued by the SEC in March 2022, has been a point of contention in the crypto space. The bulletin requires certain companies, particularly those offering crypto custody services, to record digital assets held for customers as liabilities on their balance sheets. This accounting practice has raised concerns within the industry, with many arguing it could deter banks and other financial institutions from offering crypto custody services.

The original bill to curb SAB 121 passed through both chambers of Congress with bipartisan support. The House approved it with a 228-182 vote, while the Senate passed it 60-38.

However, President Biden vetoed the bill in May, stating that removing the SEC’s guidance would hamper the regulatory agency’s ability to implement safeguards and protect investors.

Now, the House is preparing to vote on whether to override this veto.

According to House Majority Leader Steve Scalise’s weekly schedule, the vote could take place as early as Tuesday or Wednesday. However, overturning a presidential veto is no small feat. It requires a two-thirds majority in both the House and the Senate, a threshold significantly higher than the original votes.

Political experts are divided on the likelihood of a successful override. Alexander Grieve, who handles government affairs at venture capital firm Paradigm, suggests it’s not impossible, given the bipartisan support for crypto-related bills in recent votes.

However, Cody Carbone, vice president of policy for the Chamber of Digital Commerce, believes it’s unlikely, noting that the House would need about 60 more votes than it initially had to reach the two-thirds threshold.

This vote comes during a week packed with significant events for the crypto industry and the broader economy.

  • The US is set to release Consumer Price Index (CPI) and Producer Price Index (PPI) data for June, which could influence future monetary policy decisions.
  • Federal Reserve Chair Jerome Powell is scheduled to deliver his semi-annual monetary policy testimony to the House Financial Services Committee.
  • A Senate Agriculture Committee hearing on the Oversight of Digital Commodities, featuring Commodity Futures Trading Commission (CFTC) Chairman Rostin Behnam.
  • Representative Ro Khanna is also leading a Democratic crypto roundtable with industry leaders, including billionaire Mark Cuban, aimed at developing a strategy to counter potential anti-crypto policies.

The crypto market has shown sensitivity to these upcoming events, with Bitcoin experiencing a 5% drop on Sunday and altcoins seeing even steeper corrections. This volatility underscores the importance of regulatory clarity and economic indicators for the crypto industry.

The vote on SAB 121 represents a critical juncture for crypto regulation in the US. If the veto is overturned, it could signal a more accommodative regulatory environment for crypto custody services. However, if the veto stands, it may reinforce the SEC’s approach to crypto accounting practices.


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