President Biden rejected a bill, H.J.Res. 109, which aimed to reverse the SEC’s Staff Accounting Bulletin (SAB) No. 121. This SEC guidance requires financial institutions to treat digital assets they hold on behalf of customers as liabilities on their balance sheets and maintain corresponding capital reserves.

The H.J.Res. 109 was introduced by Representative Mike Flood. The resolution aims to overturn the SEC's Staff Accounting Bulletin No. 121 (SAB 121) using the Congressional Review Act.

The Biden administration opposed this resolution, arguing that it would undermine the SEC's ability to implement necessary safeguards to protect investors and ensure a stable financial system. The SEC issued SAB 121 in response to various risks associated with digital assets, aiming to enhance transparency and protect consumers from potential losses

The bill had garnered bipartisan support in Congress, passing both the House and Senate, with some legislators arguing that highly regulated financial institutions should be allowed to act as custodians for digital assets to provide a secure environment for investors.

However, President Biden's veto reflects his administration's commitment to maintaining rigorous regulatory measures in the rapidly evolving crypto market to prevent financial instability and protect consumer interests.

Biden expressed willingness to work with Congress to develop a balanced regulatory framework for digital assets. This would promote innovation in digital payments while ensuring the U.S. remains a leader in the global financial system.

news sources:
Watcher Guru
Cointelegraph