The SEC’s anti-crypto banking guidance, SAB 121, is voted down by the House

The United States House of Representatives has approved a bill aimed at overturning controversial Securities and Exchange Commission (SEC) guidance that prohibits banks from holding cryptocurrency. Despite bipartisan support for the measure, President Joe Biden has warned of a potential veto.

The bill, known as H.J. Res. 109, was passed on May 8 by the House, with 21 Democratic members joining their Republican counterparts in support. This resulted in a 228–182 vote in favour of overturning the SEC’s Special Accounting Bulletin 121 (SAB 121), which requires banks to include their customers’ crypto assets on their balance sheets, contrary to the treatment of traditional assets like securities.

Republican Representative Mike Flood, the bill’s sponsor, argued that SAB 121 unfairly burdens banks seeking to provide crypto custody services, as custodial assets are typically considered off-balance sheets.

Despite the bill’s passage in the House, President Biden has expressed opposition, threatening a potential veto. The White House issued a statement on May 8 strongly opposing the measure, stating that overturning SAB 121 would disrupt the SEC’s efforts to protect investors in crypto markets and the broader financial system.

Introduced by the SEC in March 2022, SAB 121 sets out accounting standards for institutions holding crypto assets, effectively discouraging banks from offering crypto custody services. Critics argue that this treatment of crypto holdings creates unequal treatment compared to traditional assets.