US House May Overturn Biden’s SAB 121 Veto, Additional Crypto Events Imminent this Week

This week, the digital assets industry is bracing for significant events and regulatory decisions that could shape its future. One critical development is the anticipated vote by the US House of Representatives to overturn President Biden’s veto on Staff Accounting Bulletin 121 (SAB 121).

This bulletin mandates crypto custodial firms to record clients’ cryptocurrency holdings as liabilities on their balance sheets. This development, which comes amid heightened anticipation for spot Ethereum ETF approval, has sparked debates within the crypto community.

Crypto Events and Regulations

Undoubtedly, SAB 121 has sparked substantial concern among crypto investors and companies. Many believe manding crypto firms to list customer holdings as liabilities will deter banks from offering crypto asset custodial services.

Critics argue that this could stifle innovation and limit access to digital asset investments. However, the SEC has defended SAB 121, describing it as “non-binding staff guidance” intended to enhance customer transparency and disclosures.

In May, President Biden vetoed a legislative attempt to repeal SAB 121, a move that many in the crypto industry found disappointing. The US House will likely vote to overturn this veto, which could have far-reaching implications for the crypto market.

1/ Today, despite bipartisan support, Pres Biden vetoed the repeal of SAB 121, the SEC’s punitive, anti-crypto accounting guidelines. We’re disappointed that the admin chose to overrule bipartisan majorities in both Houses of Congress who recognized the harm created by SAB 121. pic.twitter.com/F6GP727UBx

— Blockchain Association (@BlockchainAssn) May 31, 2024

In addition to the SAB 121 vote, the market anticipates the release of key economic indicators this week: June’s Producer Price Index (PPI) and Consumer Price Index (CPI) in the US. These numbers will provide insight into inflation trends and economic health.

The Federal Reserve Chair, Jerome Powell, is scheduled to deliver his semi-annual monetary policy testimony to the House Financial Services Committee.

Experts believe there’s a 50% chance of a 25-basis point interest rate cut by November, which could impact financial markets, including virtual currencies.

Meanwhile, on Wednesday, the Senate Agriculture Committee will hold a hearing focused on the oversight of digital commodities, with testimony from CFTC Chairman Rostin Behnam.

This hearing is expected to shed light on regulatory approaches to digital assets and could influence future legislation.

Additional Events on the Horizon

Representative Ro Khanna will also host a crypto roundtable with top Democrats and billionaire investor Mark Cuban. The discussion aims to counter former President Donald Trump’s critical stance on cryptocurrency.

Notably, Khanna’s engagement with leading figures, including Democratic lawyers, White House officials, and top crypto industry players, aims to build a more supportive environment for digital assets.

Later this week, the Senate will conduct a hearing on the renomination of SEC Commissioner Caroline Crenshaw and the nomination of Christy Goldsmith Romero as the new Chair of the FDIC. Romero currently serves as a CFTC commissioner.

These nominations are significant as the individuals will play crucial roles in shaping the regulatory system for virtual assets and financial markets.

Meanwhile, amid these regulatory and economic developments, the broader crypto market has recorded increased volatility.

Bitcoin recorded a 5% drop on Sunday, with altcoins facing even sharper corrections. The upcoming US CPI release has added to market fears, reflecting how sensitive crypto prices are to economic data and regulatory news.