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    President Biden Stands with SEC: Veto Shakes Crypto Custody Landscape

      TL;DR: President Joe Biden vetoed the crypto custody bill, H.J.Res. 109, supporting the SEC’s regulatory approach for banks handling crypto assets. Despite bipartisan support, the veto underscores the administration’s focus on stringent regulations to safeguard participants in the crypto market.

    In a significant move, President Joe Biden has vetoed the highly debated crypto custody bill, marking a pivotal moment in the ongoing discourse surrounding digital asset regulation. 

    Presidential Veto Upholds SEC's Stance

    The vetoed bill, H.J.Res. 109, sought to overturn the Securities and Exchange Commission's (SEC) Staff Accounting Bulletin 121 (SAB 121), which outlines the accounting practices for banks handling customers' crypto assets. President Biden's decision to veto the bill aligns with the SEC's current approach, emphasizing the need for stringent regulatory guardrails to protect consumers and investors in the rapidly evolving crypto market.

    Bipartisan Support Overturned

    Despite bipartisan support in Congress, with notable backing from both Republican and Democratic lawmakers, the President stood firm on his administration's stance. The bill had garnered attention for its potential impact on the financial industry's ability to offer digital asset custody services at scale. Critics of SAB 121 argued that the SEC's guidance treated custodied assets as liabilities, potentially stifling innovation and growth within the sector.

    Future of Crypto Regulation

    The White House has expressed a willingness to collaborate with Congress to establish a comprehensive and balanced framework for digital asset regulation. This collaborative approach aims to foster responsible development and innovation in digital asset services while reinforcing the United States' leadership in the global financial system. The veto has opened the door for further negotiations and potential legislative action to address the complexities of the digital asset market.

    The President's veto is a clear indication of the administration's commitment to consumer and investor protection in the face of new financial technologies. As the dialogue between the White House and Congress continues, the future of crypto custody and regulation remains a key focus for policymakers and industry stakeholders alike.

    Image Credit: The White House

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