ABA Urges Biden to Veto Disapproval of SAB 121

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As a researcher with a background in finance and experience following the regulatory landscape of the financial industry, I find the American Bankers Association’s (ABA) involvement in the Securities and Exchange Commission’s (SEC) Staff Accounting Bulletin 121 (SAB 121) controversy intriguing. The ABA’s decision to write a letter urging President Biden to sign H.J. Res 109, the resolution of disapproval for SAB 121, into law before his veto, raises questions about their intentions and potential motivations.

The American Bankers Association (ABA) sparked debate over Securities and Exchange Commission’s (SEC) Staff Accounting Bulletin 121 (SAB 121). A revelation emerged that the ABA had penned a letter to President Joe Biden, urging him to approve the Congressional Review Act resolution (H.J Res109), which aimed to overturn SAB 121, before he had an opportunity to veto it.

As a crypto investor, I’ve been closely following the recent developments regarding the Digital Asset Anti-Money Laundering Act and its potential impact on our industry. The American Bankers Association, which has previously advocated for stricter regulations against crypto, wrote a letter urging President Biden to sign H.J. Res. 109 (SAB 121 repeal) into law just hours before he vetoed it. This proposed legislation would have rolled back certain regulatory requirements for banks and financial institutions dealing with cryptocurrencies. However, the president ultimately decided against signing it, which may mean more hurdles for the crypto sector in terms of regulatory compliance. Stay tuned for updates on this evolving situation.

— Eleanor Terrett (@EleanorTerrett) June 1, 2024

As a crypto investor, I’ve kept a close eye on the ongoing legislative developments in the digital asset space. One recent proposal that has caught my attention is H.J. Res 109. This bill was initiated by Senators Cynthia Lummis and Mike Flood, along with Representative Wiley Nickel, with the intention of repealing SAB 121. In simpler terms, they’re aiming to overturn a Securities and Exchange Commission (SEC) rule that classifies certain digital assets as securities. This could have significant implications for the crypto market, potentially leading to more clarity and certainty in this rapidly evolving industry.

The American Bar Association, along with other financial organizations, voiced their approval for H.J. Res 129 in their submission to President Biden. They pointed out that SAB 121, a rule mandating public companies to report the fair value of user-protected digital assets on their financial statements, diverges from the standard accounting practice of categorizing custodied assets as off-balance sheet items.

Digital asset custody, which involves securely storing and managing digital assets on behalf of clients, poses a significant scaling challenge for regulated banking organizations due to stringent capital and liquidity requirements they must adhere to, unlike their non-banking counterparts.

The proponents of this perspective emphasized their dedication to serving the needs of their clients, expressing concern that the vetoing of H. J. Res 109 would leave consumers with fewer trustworthy options for safeguarding their digital assets. Critics in the field of cryptocurrencies have expressed disappointment over this decision. Jai Massari, co-founder and CLO of Lightspark, voiced her opposition, arguing that the move goes against consumer protection, regulatory shifts, and competition. She pointed out that SAB 121 prevents financial institutions from managing digital asset custody without proper backing.

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2024-06-02 04:36