(NewsInsights.org) – Cryptocurrency is relatively new. It started with Bitcoin in 2009 and has since grown exponentially to more than 20,000 types of currency in just 15 years. Lawmakers have wrangled for years on how to regulate the industry, particularly given its volatile nature and penchant for huge losses. The House and Senate recently passed bipartisan legislation, but President Joe Biden vetoed it.
In mid-May, Congress passed legislation that would strike down the US Securities and Exchange Commission’s (SEC) Staff Accounting Bulletin 121. That new standard created special rules for custodians of crypto assets, including financial institutions. One of the stipulations of SAB 121 is that any bank or institution that holds custody of crypto assets must record them as liabilities on their balance sheets. The rule was set to take place on April 11 but faced considerable backlash, not just from the cryptocurrency community but also from lawmakers.
Financial institutions had written to Biden asking him to approve Congress’ efforts to overturn the rule since, as-is, it makes it too expensive for them to participate in crypto custody. This is because, unlike most assets, the SEC would mandate banks “treat [t] the assets as if they are owned rather than simply custodied by a banking institution.” Such action would result in “higher capital, liquidity, and other prudential requirements.”
Then, in May, both chambers of Congress voted to repeal the guidance. In the House, lawmakers voted 228 to 182 to overturn the SEC rule. In the Senate, 60 voted in favor while 38 opposed. The White House had previously said Biden would veto the bill if it landed on his desk, and he did.
In a statement, the president said the legislation “risks undercutting the SEC’s broader authorities regarding accounting practices.” However, Biden noted that his administration is willing to work with Congress to develop “a comprehensive and balanced regulatory framework for digital assets.”
Copyright 2024, NewsInsights.org
