Congress faced a significant dilemma over the potential political repercussions of overturning President Joe Biden’s veto of H.J.Res.109. The bipartisan passage of H.J.Res.109, seeking to repeal the U.S. Securities and Exchange Commission’s Staff Accounting Bulletin No. 121 (SAB 121), was a rare event in Congress, showcasing support from both sides of the aisle.
SAB 121 mandated banks to treat customer crypto assets as liabilities on their balance sheets, a unique requirement for digital assets. Removing this mandate would facilitate smoother operations for banks in the crypto industry. Despite overwhelming support for the resolution in Congress, President Biden vetoed the repeal, citing concerns for consumer and investor well-being.
The Blockchain Association CEO, Kristin Smith, suggested that Biden’s stance may be out of touch with the growing consensus on the issue within Congress and the public. The question now arises – what options remain for Congress and the crypto industry in light of such strong support?
Congress does have the power to override Biden’s veto, although it poses a considerable challenge. A two-thirds majority in both the House of Representatives and the Senate is required to overturn the veto. The House needs 290 votes, with a split of 218 Republicans and 213 Democrats, while the Senate requires 66 votes, with a narrow margin between Republicans, Democrats, and independent senators.
Despite the potential bipartisan support from Republicans, the challenge lies in convincing enough Democrats to secure a successful override. However, unlike other divisive issues, crypto seems to be a non-partisan topic, as highlighted by Republican Senator Cynthia Lummis on a recent podcast.
While the road ahead may be challenging, with a divided Congress and an upcoming election, there are alternative routes to consider. The introduction of the Lummis-Gillibrand Payment Stablecoin Act provides a regulatory framework for stablecoins, effectively nullifying SAB 121 without the need for a veto override.
The crypto industry has been actively lobbying for favorable legislation, with significant donations and support from both pro-crypto lobbies and the banking sector. These efforts could influence lawmakers to either pass the Lummis-Gillibrand Act smoothly or pressure the SEC to rescind SAB 121. Both options offer a strategic approach that could appease Democrats and minimize potential political risks in the lead-up to the elections.