The American Bankers Association and three associations on Friday urged President Biden to sign a joint resolution that would overturn a Securities and Exchange Commission staff accounting bulletin that changes the way banks and other publicly traded entities are expected to account for digital assets held in custody. However, later that same day, Biden announced that he had vetoed the resolution.
H.J. Res. 109 was passed by the House and Senate with bipartisan support. The Congressional Review Act resolution would overturn SEC Staff Accounting Bulletin 121 if signed by the president. In a joint letter, the associations said the bulletin was adopted by the SEC without consulting prudential regulators or soliciting public comment, and it deviates from normal accounting treatment of custodied assets as off-balance sheet assets.
“Other, nonbank digital asset platforms subject to SAB 121 are not required to meet the same capital, liquidity or other prudential standards as banks and therefore do not face the economically prohibitive implications of SAB 121,” the associations said. “Limiting banks’ ability to offer these services leaves customers with few well-regulated, trusted options for safeguarding their digital asset portfolios and ultimately exposes them to increased risk.”
In his veto message, Biden said the resolution would inappropriately constrain the SEC’s ability to set guardrails and address future issues. “This reversal of the considered judgment of SEC staff in this way risks undercutting the SEC’s broader authorities regarding accounting practices,” Biden said.
