The Biden administration has strongly opposed bill HJ Res. 109, which would allow regulated financial companies to act as custodians of cryptocurrencies like Bitcoin. The administration argues that this move would undermine the Securities and Exchange Commission’s (SEC) efforts to protect investors and ensure the security of the overall financial system. The Executive Office of the President announced that President Biden would veto the bill if presented with it.
The proposed legislation seeks to revoke the SEC’s Staff Accounting Bulletin (SAB) No. 121, which sets strict guidelines for financial institutions regarding the custody of digital assets. The repeal, supported by both parties, aims to remove barriers that currently prevent these institutions from acting as custodians of assets like Bitcoin.
Congressman Patrick McHenry, the chairman of the House Financial Services Committee, is among the supporters of the repeal. He criticizes the regulation as an instance of “regulatory overreach” during Gary Gensler’s tenure at the SEC. McHenry argues that SAB 121 is trying to dictate how institutions safeguard Americans’ digital assets, imposing significant costs on banks and making it prohibitively expensive to provide custody for these assets.
Another supporter of HJ Res. 109 is Congressman French Hill, who highlights that it is not common practice for financial services to maintain reserves against assets in custody. Hill believes that SAB 121 is a mistake and should be overturned.
On the other hand, Cody Carbone, the policy director at the Chamber of Digital Commerce, expresses disappointment with the president’s position. He emphasizes that SAB 121 effectively prevents trusted custodians from managing digital assets.
This development takes place amidst an intensifying debate on cryptocurrency regulation, underscoring the need for clear regulations that facilitate the safe development of the industry. Congressmen Mike Flood and Wiley Nickel, for instance, criticize the flawed guidance of SAB 121 and stress the importance of regulated institutions in providing custody for spot Bitcoin ETFs and mitigating concentration risks.
At the time of writing, the price of BTC stands at US$61,235.58, reflecting a 3% decrease in the last 24 hours.
Disclaimer: The views and opinions expressed in this article, by the author or anyone mentioned, are solely for informational purposes and do not constitute financial, investment, or any other form of advice. Investing or trading cryptocurrencies carries the risk of financial loss.
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