The US House of Representatives has failed to overturn President Joe Biden's veto of a bill aimed at revoking the Securities and Exchange Commission's (SEC) crypto accounting directive, Staff Accounting Bulletin 121 (SAB 121).
The vote fell short of the necessary two-thirds majority, with 228 representatives voting in favor of overturning the veto and 184 voting against it.
This outcome leaves SAB 121 in effect, requiring public companies, particularly banks, to record customers' crypto assets on their balance sheets. This requirement aims to protect these assets from being caught in the bankruptcy processes of crypto firms but has been criticized for imposing stricter capital requirements on banks dealing with crypto.
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Although SEC Chair Gary Gensler defended SAB 121 as a necessary response to turmoil within the crypto industry, the bill to overturn the bulletin initially garnered bipartisan support, with 21 Democrats siding with the majority of Republicans when it was first passed in May.
The crypto industry has strongly opposed SAB 121. Kristin Smith, CEO of the Blockchain Association, stated:
While we are disappointed that the resolution to override the president's veto of the bipartisan SAB 121 Congressional Review Acrt did not achieve the required two-thirds majority for passage, the fight to stop this ill-conceived SEC rule will continue.
A Government Accountability Office review found that the SEC mishandled the policy by presenting it as guidance rather than a formal rule. Despite this, President Biden defended his veto, arguing that overturning SAB 121 would limit the SEC's ability to implement necessary safeguards and address future challenges in the industry.
The failure to override Biden's veto underscores the ongoing debate over the SEC's crypto policy and its implications for the banking and crypto industries.
