The Failed Attempt to Rescind SEC Staff Accounting Bulletin 121

The US House of Representatives recently fell short in their attempt to overturn President Joe Biden’s veto and rescind SEC Staff Accounting Bulletin 121. Despite 228 House members voting in favor of HJ Res. 109 to end SAB 121, the resolution did not receive the necessary two-thirds majority to counter the presidential veto.

A notable shift in votes occurred among Democrats since an earlier vote in May regarding SAB 121. Representatives such as Dean Phillips, Mikie Sherrill, and Marc Veasey changed their votes to oppose the resolution, while others like Jonathan Jackson, Ro Khanna, Tom Suozzi, and Shri Thanedar switched their stance in favor of rescinding SAB 121. Even Republican Drew Ferguson adjusted his vote from no to yes.

Representative Mike Flood, the original sponsor of the resolution, expressed determination to explore alternative paths to end SAB 121. He criticized the SEC’s regulation, labeling it as a hindrance to the development of digital financial services. Flood argued that the SEC had overreached its authority in regulating bank custody of digital assets.

House Financial Services Committee Chairman Patrick McHenry condemned President Biden’s veto, accusing the administration of prioritizing politics over the interests of the American people. McHenry expressed disappointment in the veto’s implications, suggesting that it favored bureaucratic power over economic innovation.

Various organizations, including the Blockchain Association and the American Banking Association, voiced their opposition to SAB 121. They argued that the regulation imposed unnecessary restrictions on banks, limiting their ability to offer digital asset custody services at scale. The American Banking Association specifically highlighted the impact of SAB 121 on bank adoption of Bitcoin ETFs and tokenization.

The failed attempt to rescind SEC Staff Accounting Bulletin 121 reflects the ongoing debate surrounding government regulation of digital financial services. While the resolution garnered significant support in the House, it ultimately fell short of overturning the SEC’s controversial ruling. The future of SAB 121 remains uncertain, as stakeholders continue to navigate the complex intersection of financial policy and technological innovation.