President Biden, SEC Face Backlash From Coinbase, Ripple, Crypto Industry

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As a seasoned crypto investor with a deep understanding of the industry’s intricacies, I am deeply concerned about President Biden’s decision to veto the House Joint Resolution aimed at repealing SEC’s Staff Accounting Bulletin 121 (SAB 121). While consumer and investor protection are essential, the requirement mandated by this bulletin complicates the ability of financial institutions to collaborate with crypto companies.

President Joe Biden recently rejected a House Joint Resolution aiming to annul the Securities and Exchange Commission’s (SEC) Staff Accounting Bulletin 121 (SAB 121). This bulletin requires financial institutions to report cryptocurrencies held on behalf of their clients as assets for their customers’ balance sheets.

Detractors maintain that this condition makes it more difficult for traditional financial organizations to partner with cryptocurrency businesses. However, Biden’s stance underscores the importance of this veto for safeguarding consumers and investors.

Concerns Over President Biden’s SAB 121 Veto

As a cryptocurrency industry analyst, I’ve noticed some prominent figures expressing their disappointment with the recent presidential decision. For instance, Faryar Shirzad, the Chief Policy Officer at Coinbase, voiced his criticism by stating that he disagrees with the veto.

“The President’s team let him down, leading him to exercise his exceptional veto authority to thwart the SEC Chair’s covert attempt, masked behind her staff, to undermine an entire industry.”

I find Shirzad positing that standing up for an agency’s employees’ perspectives, which were previously overlooked by the Commission, goes against President Biden and the White House when faced with congressional bipartisan majorities.

As a researcher studying the crypto industry, I’ve noticed the growing influence of institutional players in the sector, as evidenced by Brad Garlinghouse, CEO of Ripple‘s, recent comments in an interview with CNBC. He praised the election of leaders who advocate for cryptocurrency innovation and consumer protection. However, he voiced concerns about the wider repercussions of the Securities and Exchange Commission’s (SEC) latest guidance on the industry.

Crypto Community Response

The veto has sparked vigorous responses from Congress. Senator Cynthia Lummis and Representative Patrick McHenry, ardent supporters of the resolution, have expressed their disapproval. McHenry commented,

“The President’s veto undermines consumer safeguards in the digital asset sector and overturns long-established custody regulations. By going against the unified stance of Congress, the Administration is persisting with its ineffective strategy. The need for Senate approval on the Financial Institution Technology Act of 2021 (#FIT21) has become increasingly critical.”

As a researcher looking into this issue, I’ve found that both houses of Congress have passed a resolution expressing their bipartisan concern about the Securities and Exchange Commission (SEC)’s approach to digital asset regulation. This action underscores the broad agreement among lawmakers regarding the need for reconsideration or modification of the SEC’s stance. The administration has been urged by these legislators to rethink the veto or collaborate with the SEC to rescind the related guidance.

The banking industry has raised concerns about the guidance in a letter to President Biden. They pointed out that the Government Accounting Office’s interpretation of SAB 121 prevents regulated banking groups from providing custody services. This view was shared by lawmakers, who underscored the importance of a regulatory structure that encourages innovation and safeguards consumers.

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2024-06-01 18:36