Joe Biden Ready to Veto Law Allowing Bitcoin Custody by Financial Companies

The White House, under the administration of President Joe Biden, has expressed strong opposition to the bill HJ Res. 109. This legislative proposal would allow highly regulated financial companies to act as custodians of cryptocurrencies, including Bitcoin. The administration asserts that such a move would compromise the Securities and Exchange Commission’s (SEC) efforts to protect investors and ensure the security of the broader financial system. “If presented with HJ Res. 109, President Biden would veto the project”, announced the Executive Office of the President.

The proposed legislation aims to repeal the SEC’s Staff Accounting Bulletin (SAB) No. 121, which establishes restrictive guidelines for financial institutions regarding the custody of digital assets. The repeal, endorsed by both parties, aims to eliminate barriers that currently prevent such institutions from acting as custodians of assets like Bitcoin.

The chairman of the House Financial Services Committee, Congressman Patrick McHenry, is one of the supporters of the repeal, criticizing the regulation as an example of “regulatory overreach” under Gary Gensler’s tenure at the SEC. “SAB 121 is attempting to dictate how institutions protect Americans’ digital assets, which implies significant costs for banks, making it prohibitive to fund the custody of these assets,” said McHenry.

JUST IN: 🇺🇸 US President Joe Biden Administration says Biden would veto legislation that would allow highly regulated financial firms to custody #Bitcoin and crypto. pic.twitter.com/aXx8aq1m0Z

— Bitcoin Magazine (@BitcoinMagazine) May 8, 2024

In addition to McHenry, Congressman French Hill also expressed support for HJ Res. 109, highlighting that “it is not standard financial services practice to maintain reserves against assets in custody. SAB 121 is a mistake and needs to be overturned.”

Contrarily, Cody Carbone, policy director at the Chamber of Digital Commerce, expressed disappointment with the president’s stance, emphasizing that “SAB 121 effectively prohibits trusted custodians from managing digital assets.”

This development comes in a context where the debate on the regulation of cryptocurrencies is intensifying, highlighting the growing need for regulatory clarification that allows the safe development of the industry. Congressmen Mike Flood and Wiley Nickel, for example, criticized the SAB 121 guidance as flawed, highlighting the importance of regulated institutions in custody of spot Bitcoin ETFs and avoiding concentration risks.

At the time of publication, the price of BTC was quoted at US$61,235.58 with a drop of 3% in the last 24 hours.

Disclaimer:

The views and opinions expressed by the author, or anyone mentioned in this article, are for informational purposes only and do not constitute financial, investment or other advice. Investing in or trading cryptocurrencies carries a risk of financial loss.