Biden Administration Poised for Victory in Cryptocurrency Regulation

The Biden Administration is nearing a significant win in its efforts to regulate cryptocurrency, as a resolution aimed at overturning President Biden's veto of an accounting bulletin is unlikely to secure enough votes in the House of Representatives. The resolution seeks to repeal SAB 121, which restricts traditional investment banks from holding digital assets. Sources indicate that the vote scheduled for Wednesday will not achieve the necessary two-thirds majority to override the veto, signaling a setback for crypto advocates. Despite some hopes among crypto investors that recent turmoil within the Democratic Party might sway Congressional Democrats to support the repeal, the opposite appears to be true. Prominent party members are reportedly reluctant to undermine the president further, even in light of calls for his resignation following a poor debate performance. This political landscape suggests that Democrats are maintaining a unified front against the resolution. Critics, including top Republicans, argue that the SEC's SAB 121 represents a significant overreach, as it allows the agency to impose regulations without traditional rulemaking processes. The guidance requires banks to treat crypto as both an asset and a liability, increasing compliance costs and discouraging them from acting as custodians for digital assets. Industry experts warn that this concentration of risk could endanger investors, as fewer platforms are left to manage crypto custody. Industry leaders emphasize that maintaining SAB 121 could harm U.S. competitiveness and exacerbate risks in the crypto market. Calls for the withdrawal of the guidance reflect growing concerns about the implications of regulatory restrictions on the future of digital asset management.