The American Bankers Association, Bank Policy Institute, Financial Services Forum, and Securities Industry and Financial Markets Association sent a letter to President Joe Biden on May 31, urging him to sign the resolution passed by Congress to overturn the SEC’s Staff Accounting Bulletin 121 (SAB 121). The letter outlines that SAB 121, issued without regulatory consultation or public input, requires public companies to record user-safeguarded digital assets on their balance sheets, deviating from the standard off-balance sheet treatment. This mandate impedes regulated banking organizations from providing digital asset custody services at scale due to heightened capital and liquidity requirements.
Banking Associations Support Resolution to Overturn SEC's Controversial Crypto Rules
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The associations contend that SAB 121 negatively impacts investors and customers by limiting secure, regulated custody options, restricting banks’ ability to develop distributed ledger technology use cases, and creating an uneven competitive landscape with non-bank entities. The letter was reportedly sent to Biden just hours before he vetoed the resolution. However, the resolution can still pass and become law if Congress overrides the veto. This requires a two-thirds majority vote in both the House of Representatives and the Senate. If both chambers achieve this supermajority, the resolution becomes law despite the president’s veto.
