President Joe Biden's recent veto of a House Joint Resolution to repeal the Securities and Exchange Commission’s (SEC) Staff Accounting Bulletin 121 (SAB 121) has drawn strong backlash from prominent figures in the cryptocurrency industry and Congress. The bulletin requires financial institutions to hold cryptocurrencies on their balance sheets, which critics argue complicates collaboration between financial institutions and crypto companies.

Industry Leaders Speak Out

Faryar Shirzad, Chief Policy Officer at Coinbase, criticized the veto, stating that it was a disservice to President Biden and the Office of the President. Shirzad argued that the President was not well-served by his team and that the SEC Chair was using the staff to destabilize the entire industry. Ripple CEO Brad Garlinghouse also expressed concerns about the broader implications of the SEC’s guidance on the industry, highlighting the increasing institutional involvement in crypto and the need for regulatory clarity.

Congressional Reactions

The veto has drawn strong reactions from Congress. Senator Cynthia Lummis and Representative Patrick McHenry, critical proponents of the resolution, have voiced their opposition. McHenry stated that the President’s veto weakens consumer protections in digital asset markets and upends decades of custody rules. Both houses of Congress had passed the resolution with bipartisan support, reflecting widespread concern about the SEC’s approach to regulating digital assets. Lawmakers have urged the administration to reconsider the veto or work with the SEC to rescind the guidance.

Banking Sector Concerns

The banking sector has also expressed reservations about the guidance. In a letter to President Biden, banking organizations noted that the Government Accounting Office’s assessment of SAB 121 blocks regulated banking groups from offering custody services. This sentiment was echoed by lawmakers, who stressed the need for a regulatory framework supporting innovation and consumer protection.