Major Bummer As U.S. House’s Effort To Override Biden’s Veto On Pro-Crypto Banking Bill Fails

U.S. House members voted on whether to overturn a veto from President Joe Biden, which failed on Thursday, leaving the Securities and Exchange Commission’s controversial crypto accounting bulletin intact.

The bill would have required a two-thirds supermajority to pass the House, after which it would have required another two-thirds vote of approval in the Senate. While a strong majority voted against Biden’s veto, the turnout did not reach the two-thirds threshold from Democrats needed to override the president’s defense of the SEC.

SAB 121 Stands As Presidential Veto Is Upheld

In the July 11 vote, 228 lawmakers voted to override President Biden’s veto of H.J.Res. 109, overturning SEC’s contentious Staff Accounting Bulletin (SAB) 121 — 60 votes short of the two-thirds majority required. 21 Democrats and 207 Republicans voted yes, while 183 Democrats and one Republican voted no.

The failed vote suggests that the presidential veto would likely stand, and American banks would be restricted from serving as crypto custodians for their customers. SAB 121 requires companies that custody crypto to record customers’s crypto assets as liabilities on their balance sheets.

The ability for US banks to custody crypto became urgent this year after the Securities and Exchange Commission greenlighted spot Bitcoin ETFs and spot Ether ETFs to trade on Wall Street. Those investment vehicles require real BTC and ETH to be held by a third party. However, since traditional banks are barred from safeguarding digital assets, exchanges like Coinbase control the lion’s share of assets tied with such spot ETFs. 

“It did not have to be this way,” asserted pro-crypto House Financial Services Committee Chair Rep. Patrick McHenry (R-NC) on Wednesday before the vote. “On digital assets, on the regulation of digital assets, on the functioning of a new asset class that a substantial number of Americans and the world are using. […] The Biden administration has been given every opportunity to work with this Congress on digital asset policy and to come to a reasonable resolution on digital asset policy.”

Although crypto industry experts were hopeful, they knew SAB 121 faced low odds of veto-proof passage through the House. A statement in May from President Biden had stated that overturning the bulletin “would inappropriately constrain the SEC’s ability to set forth appropriate guardrails and address future issues.”

The July 11 vote followed dozens of well-known crypto industry figures, including Ripple CEO Brad Garlinghouse meeting with lawmakers and Biden adviser Anita Dunn in a roundtable that aimed to articulate some of the differences between the industry and the Biden regime.