The potential political repercussions for Congress in overturning President Joe Biden’s veto of H.J.Res.109 might prove to be too significant.
Recently, Congress made the decision to approve H.J.Res.109, aiming to revoke the U.S. Securities and Exchange Commission’s (SEC) Staff Accounting Bulletin No. 121 (SAB 121) with an unexpected display of bipartisan unity.
SAB 121 mandates that banks list customer crypto assets on their financial statements as liabilities, a requirement specific to digital assets. Eliminating this mandate would streamline business operations between banks and the crypto industry.
The remarkable bipartisan backing resulted in the resolution passing in the Senate with a vote of 60 to 38. Despite Congress’s support for the resolution, President Biden vetoed the repeal, expressing his commitment to safeguarding consumers and investors.
Blockchain Association CEO Kristin Smith suggested that Biden’s decision may go against the prevailing public sentiment and the growing consensus within Congress.
What avenues are available for Congress and the crypto industry given the overwhelming support for the repeal?
Congress possesses the necessary votes to override Biden’s veto. While the veto presents a challenge, both the House and Senate need a two-thirds majority to counter it. The House requires 290 votes, with 218 Republicans and 213 Democrats, while the Senate needs 66 votes, with 49 Republicans, 47 Democrats, and four independent senators.
Although the Republican Party demonstrates a pro-crypto stance – with figures like former President Donald Trump endorsing the industry – garnering support from Democrats remains crucial to overturning the veto.
Despite potential divisions, the issue of crypto appears less polarizing compared to other topics. Senator Cynthia Lummis highlighted that bipartisan support for repealing SAB 121 stemmed from procedural concerns rather than political motives.
In a historic moment, the U.S. House approved the FIT21 Act on May 22, 2024, marking the first digital asset legislation in U.S. history. The legislation received robust bipartisan backing, with 71 Democrats and 208 Republicans voting in favor.
Past instances of Congress overriding presidential vetoes, such as those of Donald Trump and Barack Obama, underscore the possibility of overcoming Biden’s veto. However, exploring alternative approaches may prove more prudent.
One such option is the Stablecoin Act, offering a regulatory framework for stablecoins and effectively nullifying SAB 121 without requiring a veto override. Introduced by Senators Lummis and Gillibrand, this act presents a strategic pathway for Democrats to navigate the issue without risking political turmoil.
The cryptocurrency industry’s efforts to lobby for favorable regulations have intensified, with major players like Coinbase donating $25 million to Fairshake, a crypto-focused PAC supporting crypto-friendly candidates. The involvement of banking and pro-crypto lobbies could sway lawmakers towards advocating for the Stablecoin Act or pressuring the SEC to withdraw SAB 121, thereby mitigating political risks in the lead-up to the elections.