The House voted to pass a measure aimed at overturning a controversial Securities and Exchange Commission bulletin that establishes certain accounting standards for firms that custody crypto.
The House voted 228-182 on Wednesday, with mostly Republicans in favor of the measure. Twenty-one Democrats voted for it.
The bulletin, which was first published in 2022, has drawn controversy over the past year over concerns in the crypto industry that it could prevent banks from safeguarding digital assets. It requires firms that custody crypto to record customer crypto holdings as liabilities on their balance sheets.
It’s unclear if the measure will become law. On Wednesday, the White House released a “statement of administration policy” saying President Joe Biden would veto it.
The White House said that “limiting the SEC’s ability to maintain a comprehensive and effective financial regulatory framework for crypto-assets would introduce substantial financial instability and market uncertainty.”
House Financial Services Committee Chair Patrick McHenry, R-N.C., said the bulletin requires banks to take on “significant capital and liquidity” during remarks on the House floor earlier on Wednesday.
“This essentially makes it cost-prohibitive for financial institutions to custody their customers’ digital assets,” McHenry said.
Rep. Mike Flood, R-Neb., who introduced the resolution alongside Rep. Wiley Nickel, D-N.C. earlier this year, said the bulletin “upends custodial practice for banks” and keeps banks out of the market” in remarks made earlier on Wednesday.
The committee’s leading Democrat, Maxine Waters, D-Calif, accused the bill’s sponsors of undermining the SEC on the House floor earlier on Wednesday.
“The bill takes a sledgehammer to fix an issue that may nearly need a scalpel,” Waters said. SAB 121 helps provide transparency, which can help prevent the kind of fraud that led to collapses of crypto firms, such as crypto exchange FTX, she added.
