The Failed Attempt to Rescind SEC Staff Accounting Bulletin 121

The US House of Representatives recently fell short in their attempt to overrule President Joe Biden’s veto of HJ Res. 109, which aimed to rescind SEC Staff Accounting Bulletin (SAB) 121. Despite 228 House members voting in favor of ending SAB 121, the outcome did not meet the two-thirds vote threshold required to counter a presidential veto. This represents majority support for the resolution, but ultimately it was not enough to overturn the decision.

According to Fox Business reporter Eleanor Terrett, several Democrats changed their stance on the issue since an earlier vote in May. Dean Phillips, Mikie Sherrill, and Marc Veasey decided to vote against the resolution, opposing the end of SAB 121. On the other hand, Jonathan Jackson, Ro Khanna, Tom Suozzi, and Shri Thanedar switched their votes to favor rescinding SAB 121. Even Republican Drew Ferguson changed his vote from no to yes. These changes in positions highlight the complexity and divisiveness of the issue at hand.

Representative Mike Flood, who originally introduced the resolution, expressed his disappointment at the failed vote. He believes that SAB 121 is a “bad regulation” that hinders banks from participating in digital asset custody. Flood argues that the SEC has gone beyond its authority by dictating bank custody policy. House Financial Services Committee Chairman Patrick McHenry also criticized Biden’s veto, accusing the administration of siding with bureaucrats instead of the American people. The Blockchain Association and the American Banking Association have also voiced their concerns about the restrictions imposed by SAB 121, with the latter stating that it limits bank adoption of Bitcoin ETFs and tokenization.

Despite the setback in the House of Representatives, supporters of overturning SAB 121 remain determined. Representative Mike Flood has vowed to explore other pathways to end the regulation and promote the growth of digital financial services. The Blockchain Association has pledged to challenge the SEC rule through Congress and the courts. The American Banking Association continues to advocate for the elimination of SAB 121, emphasizing the need for banks to have the flexibility to offer digital asset custody services on a larger scale.

The failed attempt to rescind SEC Staff Accounting Bulletin 121 highlights the complexities and differing opinions surrounding regulations in the digital asset space. As stakeholders continue to push for change, it remains to be seen what the future holds for SAB 121 and its impact on the financial industry.