Biden’s Veto on Crypto Rule Stands as House Fails to Override

The U.S. House of Representatives was unable to gather enough votes to override President Joe Biden’s veto of a resolution concerning a Securities and Exchange Commission (SEC) rule on how banks record cryptocurrency as a liability on their balance sheets. The failed vote ensures that the veto will stand, impacting how U.S. banks can serve as crypto custodians.

On July 11, 228 House members voted to override Biden’s veto of H.J.Res. 109, which sought to overturn SEC Staff Accounting Bulletin (SAB) No. 121. This total fell short by 60 votes of the two-thirds majority required. As a result, U.S. banks will continue to face limitations in serving as crypto custodians for their customers unless new legislation is introduced.

“The crypto industry and its allies have long chided the SEC for not providing enough clarity for how crypto assets should be regulated,” said Representative Maxine Waters, expressing opposition to SAB 121. “It’s just that the industry didn’t like the answer they got.”

President Biden had announced his intention to veto H.J.Res. 109 on May 8, just hours before it passed in the House with support from 21 Democratic representatives in a 228 to 182 vote. The Senate followed suit on May 16, voting 60 to 38 in favor of the resolution. However, Biden’s veto on May 31 ultimately halted the legislation.

This failed override vote marks a continuation of Biden’s successful use of veto power; since taking office in 2021, he has issued 12 vetoes, none of which have been overridden by Congress. The last time the House overrode a presidential veto was in December 2020, under then-President Donald Trump, with the National Defense Authorization Act.

Many cryptocurrency advocates have criticized the Biden administration for opposing legislation that favors the industry, such as the joint resolution. The White House and SEC also issued statements against the Financial Innovation and Technology for the 21st Century (FIT21) Act, a bill aimed at clarifying digital asset regulation.

The vote followed a roundtable meeting where policymakers, including Representatives Ro Khanna and Joe Neguse, discussed crypto with industry leaders. Although initial reports suggested that President Biden might attend the event, his July 10 schedule did not include such plans. Crypto Council for Innovation CEO Sheila Warren described the roundtable as a “productive step forward” in addressing crypto as a nonpartisan issue.

Meanwhile, the political landscape of cryptocurrency is witnessing significant shifts. Former President Donald Trump is set to attend the upcoming Bitcoin Conference in Nashville. This move marks a dramatic change in his stance on bitcoin, having previously dismissed the cryptocurrency in favor of the U.S. dollar. Trump’s participation could signal a broader trend within the Republican Party, which now includes bitcoin in its platform.

Scott Melker, host of The Wolf of All Streets podcast, speculated that Trump’s role at the conference could involve a fundraiser or a keynote speech. Melker noted that Trump’s embrace of bitcoin could influence crypto enthusiasts who are single-issue voters, putting pressure on the Biden administration to adopt a more crypto-friendly approach.

Melker also highlighted a Democratic roundtable on crypto policy, co-hosted by Congressman Ro Khanna, which aimed at informing and possibly shifting the Biden administration’s stance on crypto. This indicates an acknowledgment of the growing importance of the crypto constituency.

Trump’s pivot towards bitcoin and the broader crypto market could be a game-changer, signaling a significant policy shift that might attract more crypto-focused voters. This development could compel the Biden administration to reassess its position and potentially soften its rhetoric against cryptocurrencies.

As the debate over cryptocurrency regulation continues, the political dynamics surrounding digital assets are likely to evolve, influencing both the crypto market and the broader financial landscape.

David Thompson
Financial Desk