On May 8, the Biden administration announced its intention to veto H.J. Res. 109, aimed at overturning the SEC’s Staff Accounting Bulletin 121 (SAB 121).

The administration expressed strong opposition to the resolution, citing concerns that the proposed change would disrupt the SEC's efforts to safeguard crypto market investors and the financial system. According to the administration, the bulletin was issued in response to demonstrated risks leading to customer losses and reflects carefully considered views from SEC staff.

The administration argued that invoking the Congressional Review Act to pass the resolution would inappropriately limit the SEC's ability to establish guidelines and address crypto-related issues, potentially introducing financial instability and market uncertainty.

The notice concluded by stating that if presented with H.J. Res. 109, the President would veto it.

The US House of Representatives was scheduled to vote on the resolution on May 8. Chairman of the House Financial Services Committee Patrick McHenry voiced support for the resolution, criticizing SAB 121 as an example of SEC overreach under Chair Gary Gensler. He argued that the agency bypassed the required public comment and rulemaking process outlined in the Administrative Procedure Act (APA) by labeling the guidance as staff requirements.

McHenry highlighted the potential financial burdens of SAB 121 on banks offering custody services for customer crypto, warning that reduced bank participation could pose risks to user assets. Representative Tom Emmer also supported overturning SAB 121, initially sponsored by Congressman Mike Flood.

SAB 121 mandates that financial institutions holding customer crypto assets must include them on their balance sheets. The banking industry, including the American Bankers Association (ABA), has raised concerns about the policy, noting challenges for banks acting as custodians for spot Bitcoin ETFs due to reserve and capital requirements. Additionally, the ABA highlighted the bulletin's failure to differentiate between cryptos on public ledgers and traditional assets on permissioned ledgers. Despite dissatisfaction with the current rules, the ABA has advocated for modifications to SAB 121 rather than its complete overturning.