The US House of Representatives recently failed to garner enough votes to overrule President Joe Biden’s earlier Veto and rescind SEC Staff Accounting Bulletin 121. The vote, which took place on July 11, showed that 228 House members voted in favor of HJ Res. 109 to end SAB 121, while 184 voted against the resolution, and 21 abstained. Although it represents majority support for overturning SAB 121, the outcome fell short of the two-thirds vote threshold required to counter a presidential veto.
It was reported by Fox Business reporter Eleanor Terrett that some Democrats changed their stance on SAB 121 since an earlier vote in May. Individuals such as Dean Phillips (D-MN), Mikie Sherrill (D-NJ), and Marc Veasey (D-TX) changed their votes to oppose the end of SAB 121. On the other hand, Jonathan Jackson (D-IL), Ro Khanna (D-CA), Tom Suozzi (D-NY), and Shri Thanedar (D-MI) changed their votes to support rescinding SAB 121. Notably, Republican Drew Ferguson (R-GA) also changed his vote from no to yes.
Representative Mike Flood, who introduced the resolution, expressed disappointment over the failed vote and vowed to explore other avenues to end SAB 121. Flood criticized SAB 121 as a “bad regulation” that restricts banks from being involved in digital asset custody. House Financial Services Committee Chairman Patrick McHenry condemned Biden’s veto, accusing the administration of siding with bureaucrats over the American people. The Blockchain Association and the American Banking Association have also expressed intentions to challenge SAB 121, citing its negative impact on bank adoption of digital assets.
The failure to overturn SEC Staff Accounting Bulletin 121 has significant implications for the financial industry. The restrictions imposed by SAB 121 hinder banks from offering digital asset custody services and limit their ability to engage in activities such as Bitcoin ETFs and tokenization. Moving forward, proponents of rescinding SAB 121 will need to seek alternative strategies to achieve their goal of promoting innovation and growth in the digital financial sector. The outcome of the House vote underscores the challenges of navigating regulatory hurdles and the complexities of policymaking in a rapidly evolving digital landscape.
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