Useless Biden, Veto's SEC’s SAB 121 even after the surprising approval of the ETH ETF, many in the crypto community hoped that President Biden might be softening his stance toward the industry. Reports from The Block even suggested a surprising shift in tone from the Biden campaign, indicating increased outreach to the crypto sector. Optimists hoped he would not veto the bill to overturn the SEC’s SAB 121, which complicates the ability of entities like banks to custody crypto assets.
Unfortunately, that hope was dashed.
Late Friday, President Biden vetoed the bill aimed at invalidating the SEC’s Staff Accounting Bulletin No. 121, which the crypto industry, banks, and Congress argue has hindered their ability to work with banks. Since its publication in 2022, the guidance has faced significant pushback from lenders who claim it makes it too costly to scale up services for holding digital assets on behalf of customers. The resolution to overturn this bulletin passed the House with a vote of 228–182 and the Senate with a vote of 60-38, with 11 Democrats joining all Republicans to counter SEC Chairman Gary Gensler. Lawmakers supporting the resolution argued that the guidance limits options for Americans wishing to store digital assets in traditional banks.
In his veto message released Friday evening, President Biden stated, "My administration will not support measures that jeopardize the well-being of consumers and investors. Appropriate guardrails that protect consumers and investors are necessary to harness the potential benefits and opportunities of crypto-asset innovation." He added that he was “eager to work with Congress to ensure a comprehensive and balanced regulatory framework for digital assets,” despite both the House and the Senate asserting that the bill he just vetoed offered precisely that.
Earlier this month, the White House expressed opposition to House-passed legislation establishing a regulatory framework for digital assets, citing insufficient consumer and investor protections. However, it did not issue a full veto threat, suggesting the president was open to negotiations. Unfortunately, it appears that President Biden was swayed by the anti-crypto faction of the Democratic Party, led by Senator Elizabeth Warren. This move is likely to alienate the remaining support he had within the crypto community, which has found an ally in candidate Trump (at least for now). Some speculate that the administration’s reversal on crypto was influenced by the recent Trump hush money payments case, allowing Biden to reveal his true anti-crypto stance. This decision may force the Democrats to secure additional support to offset the expected loss of votes from the crypto industry. Even Anthony Scaramucci, a staunch critic of Trump, remarked that the "very bad" veto decision would "cost him more than he realizes."
Meanwhile, Trump has been making efforts to court crypto voters by hosting events for his NFT holders and promising to commute the sentence of Silk Road founder Ross Ulbricht, despite his mixed record on crypto.
There is now no ambiguity about Biden’s stance on crypto. With this veto, he has firmly aligned himself with SEC Chairman Gary Gensler and Senator Elizabeth Warren, signaling continued support for the SEC’s stringent approach to regulating the crypto industry.
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