3 Jun, 24

Biden Vetoes SAB 121 Crypto Resolution

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In a significant move that underscores his administration’s stance on financial regulation and consumer protection, U.S. President Joe Biden vetoed a House Joint Resolution (H.J.Res. 109) that aimed to repeal the Securities and Exchange Commission’s (SEC) Staff Accounting Bulletin 121 (SAB 121). The veto, announced on May 31, 2024, has sparked a heated debate within the financial and cryptocurrency sectors.

The vetoed resolution targeted SAB 121, an SEC guideline introduced to provide clearer accounting standards for financial institutions holding cryptocurrency assets. Critics argue that these guidelines impose undue burdens on banks and stifle innovation in the rapidly evolving crypto market. However, Biden and his administration contend that the regulations are necessary to protect consumers and ensure financial stability.

Understanding SAB 121

Staff Accounting Bulletin 121, issued by the SEC, mandates that financial institutions holding crypto assets for customers must record these assets on their balance sheets as liabilities. This approach differs from traditional asset custody practices and is intended to reflect the unique risks associated with digital assets. According to the SEC, the guidance aims to enhance transparency and accountability, ensuring that financial institutions are adequately prepared to safeguard customer assets against potential losses​ (markets.businessinsider.com)​​ (Forbes India)​.

Congressional Response

The House of Representatives and the Senate passed H.J.Res. 109 with significant bipartisan support, reflecting widespread concern about the potential impact of SAB 121 on the financial sector. Lawmakers like Representative Mike Flood, who sponsored the resolution, and Senator Ron Wyden argued that the SEC’s guidelines create an unfair burden on banks and could inhibit their ability to provide crypto custody services. These legislators viewed the resolution as a necessary check on what they perceived as overreach by the SEC​ (Cointelegraph)​​ (Forbes India)​.

Biden’s Justification for the Veto

President Biden’s veto message emphasized his administration’s commitment to consumer protection and financial stability. He argued that overturning SAB 121 would undermine the SEC’s ability to regulate effectively and respond to future challenges in the crypto market. Biden highlighted that the SEC’s guidelines were developed to address demonstrated risks and ensure that financial institutions maintain appropriate safeguards for digital assets​ (markets.businessinsider.com)​​ (Cointelegraph)​.

The President also pointed out that the Congressional Review Act, which was invoked to challenge SAB 121, could restrict the SEC’s broader regulatory authority. By maintaining the guidelines, Biden aims to preserve the SEC’s capability to establish necessary protections for consumers and investors in the volatile and complex crypto market​ (Cointelegraph)​​ (Forbes India)​.

Industry Reaction

The cryptocurrency industry and some financial institutions reacted strongly to Biden’s veto. Many industry leaders and advocacy groups criticized the decision, arguing that it would stifle innovation and limit the ability of U.S. financial institutions to compete globally. The Blockchain Association, for instance, expressed disappointment, noting that bipartisan majorities in Congress recognized the negative implications of SAB 121 and had sought to address them through the resolution​ (Cointelegraph)​​ (Forbes India)​.

Brad Garlinghouse, CEO of Ripple, described the veto as a significant setback for the crypto industry at a critical juncture, while Cody Carbone, Chief Policy Officer at the Chamber of Digital Commerce, called it a blow to financial innovation and freedom​ (Cointelegraph)​​ (Forbes India)​.

Broader Implications

Biden’s veto highlights the ongoing tension between regulatory bodies and the burgeoning crypto industry. While the administration insists that robust regulations are essential for protecting consumers and maintaining market stability, critics argue that excessive regulation could drive innovation and investment away from the U.S. This veto could also signal the administration’s broader approach to crypto regulation, emphasizing caution and consumer protection over rapid industry growth.

The debate over SAB 121 reflects broader concerns about how to integrate digital assets into the existing financial system without compromising safety and soundness. As the crypto market continues to evolve, the balance between fostering innovation and ensuring robust regulatory oversight will remain a contentious issue​ (markets.businessinsider.com)​​ (Cointelegraph)​.


President Biden’s veto of H.J.Res. 109, aimed at repealing the SEC’s SAB 121, underscores his administration’s prioritization of consumer protection and financial stability in the face of emerging digital asset markets. While the decision has sparked significant controversy and criticism from the crypto industry, it reflects a cautious approach to integrating cryptocurrencies into the broader financial system. The ongoing debate highlights the challenges and complexities of regulating a rapidly evolving market and the need for balanced policies that protect consumers while encouraging innovation.


1. What is SAB 121? SAB 121 is an SEC guideline requiring financial institutions to record crypto assets held for customers as liabilities on their balance sheets, aimed at enhancing transparency and risk management.

2. Why did President Biden veto H.J.Res. 109? President Biden vetoed the resolution to maintain the SEC’s regulatory authority and ensure that financial institutions have adequate safeguards to protect consumers and investors.

3. What are the main criticisms of SAB 121? Critics argue that SAB 121 imposes undue burdens on financial institutions, potentially stifling innovation and limiting their ability to offer crypto custody services.

4. How did Congress react to SAB 121? Both the House and Senate passed a resolution to repeal SAB 121, reflecting bipartisan concern about its impact on the financial sector.

5. What are the broader implications of Biden’s veto for the crypto industry? The veto highlights the administration’s cautious approach to crypto regulation, prioritizing consumer protection and financial stability, which may lead to more stringent oversight of the digital asset market.

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