Crypto D-Day: Will Congress Override Biden’s Veto on Wednesday?

The US House of Representatives is set to vote on significant cryptocurrency legislation on Wednesday, July 10. This vote could potentially override President Joe Biden’s veto of the Securities and Exchange Commission’s (SEC) resolution to repeal Staff Accounting Bulletin 121 (SAB 121). 

President Biden vetoed this bill in June, and it has since garnered considerable attention due to its potential impact on how financial institutions manage Bitcoin and other crypto assets.

The SEC introduced SAB 121 in 2022, requiring banks that hold cryptocurrency to report these assets as liabilities on their balance sheets. Many within the cryptocurrency industry have criticized this rule, arguing that it imposes an additional regulatory burden. They believe this deters banks and other institutional players from engaging with digital assets.

Initially, the House passed the resolution opposing SAB 121 in early May with a vote of 228-182. This vote saw support from 21 Democrats alongside unanimous Republican backing. Despite this, President Biden exercised his veto power. Consequently, a vote to override the veto has been scheduled. This override requires a two-thirds majority in both the House and Senate to succeed.

Ron Hammond of the Blockchain Association highlighted the unique political dynamics at play, noting that “crypto has now become a campaign issue.” He emphasized the bipartisan support seen in previous votes and pointed out the significant challenge ahead. Hammond remarked, “This effort is a tough uphill climb as only 21 Democrats joined all Republicans in support, which is well below the two-thirds threshold needed.”

Perianne Boring from the Digital Chamber added urgency to the discussion, stressing the need for increased Democratic support. She stated, “The bill to nullify SAB 121 is back for a vote in the House this week after the President’s veto on May 31. This constitutionally mandated vote requires a two-thirds majority to override the veto. We need approximately 60 more House Democrats to support our bill to end SAB 121.”

In light of the challenges associated with overturning the veto, lawmakers have also explored alternative legislative strategies. Eleanor Terrett of Fox Business shared via X, “A Democratic staffer familiar with the House leaders' thinking does not expect many Democrats to change their votes on Wednesday. 

They see a better pathway to overriding SAB 121 through HR 5741 – the Uniform Treatment for Custodial Assets Act.” This bipartisan bill, introduced by US Rep Mike Flood and cosponsored by Reps French Hill, Wiley Nickel, and Ritchie Torres, addresses the accounting treatment of digital assets in a more favorable manner.

Moreover, the House Appropriations Committee has proposed a policy rider in its budget bill that would prevent the SEC from using funds to enforce SAB 121. This illustrates another approach to modifying the regulatory environment surrounding crypto custody. By including this policy rider, lawmakers are seeking to limit the SEC’s ability to implement SAB 121, thereby easing the regulatory pressures on financial institutions dealing with cryptocurrency.