President Joe Biden (D) on May 31 vetoed a Congressional Review Act (CRA) resolution that aimed to nullify Securities and Exchange Commission (SEC) guidance establishing accounting standards for financial firms with crypto assets. The resolution previously passed the House of Representatives 228-182 on May 8 and the Senate 60-38 on May 16.
The SEC published Staff Accounting Bulletin 121 on March 31, 2022, aiming to provide “interpretive guidance for entities to consider when they have obligations to safeguard crypto-assets held for their platform users,” according to the bulletin. The SEC described the bulletin as guidance—government agency documents that are non-binding and advise parties about rules, laws, and procedures. The Government Accountability Office (GAO) ruled on October 31, 2023, that the guidance met the definition of a rule as outlined in the Administrative Procedure Act and was subject to review under the CRA.
U.S. Representative Mike Flood (R-Neb.) and U.S. Senator Cynthia Lummis (R-Wyo.) on February 1, 2024, filed companion CRA resolutions in Congress disapproving the SEC accounting bulletin. Flood argued in a press release, “The SEC issued SAB 121 without conferring with prudential regulators despite the accounting standard’s effects on financial institutions’ treatment of custodial assets, and the SEC issued SAB 121 without going through the notice-and-comment process. In the face of overreach by a regulator, it is the role of Congress to serve as a check.”
In his veto message, Biden argued in part, “This reversal of the considered judgment of SEC staff in this way risks undercutting the SEC’s broader authorities regarding accounting practices.”
The latest action was Biden’s eleventh veto of a CRA resolution during his administration.
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