The White House has expressed strong opposition to proposed legislation H.J. Res. 109, which would allow regulated financial firms to act as custodians for Bitcoin and other cryptocurrencies. According to the Executive Office of President Joe Biden, this resolution would interfere with the Securities and Exchange Commission’s (SEC) efforts to protect investors and the financial system. The President is expected to veto the resolution if it is presented to him.
H.J. Res. 109 aims to overturn the SEC’s Staff Accounting Bulletin (SAB) No. 121, which currently restricts financial institutions from holding digital assets. This bipartisan resolution argues that SAB 121 imposes excessive burdens on financial institutions, making it cost-prohibitive for them to manage customers’ digital assets.
US Congressman Patrick McHenry, Chairman of the House Financial Services Committee, criticized the SEC’s SAB 121 as regulatory overreach and detrimental to the safeguarding of Americans’ digital assets. He highlighted that the regulation requires these assets to be included on a firm’s balance sheet, imposing significant capital and liquidity costs.
#WATCH: Chairman @PatrickMcHenry delivers remarks in support of H.J.Res. 109 to nullify SAB 121:
"This bipartisan resolution is an essential effort to protect consumers and foster innovation in digital asset markets."
Read more 🔗https://t.co/jnIBJFHIPj
📺 Watch 👇 pic.twitter.com/fOxOh8DtWH
— Financial Services GOP (@FinancialCmte) May 8, 2024
Congressman French Hill also supported the resolution, pointing out that requiring reserves for assets held in custody is not standard practice in financial services. Cody Carbone, Chief Policy Officer at The Chamber of Digital Commerce, echoed these concerns, noting that SAB 121 effectively prevents trusted custodians from managing digital assets effectively.
Holding reserves against the assets held in custody is NOT standard financial services practice.
The Biden Admin's SAB 121 is misguided and should be nullified. I thank @USRepMikeFlood for his excellent work in leading a CRA resolution to roll back the SEC's failure in their… pic.twitter.com/jwaTYWxhXs
— French Hill (@RepFrenchHill) May 8, 2024
Earlier, Congressmen Mike Flood and Wiley Nickel wrote an op-ed calling for regulatory revisions to allow highly regulated institutions to offer custodian services for digital assets, emphasizing the need to mitigate concentration risks associated with limited custodian options for spot Bitcoin ETFs.