Biden Veto Leaves SEC Crypto Custody Bulletin in Place

President Joe Biden vetoed H.J.Res. 109 on May 31, 2024, blocking a congressional resolution that would have nullified the Securities and Exchange Commission staff’s accounting guidance for companies safeguarding crypto assets for platform users.

The veto left Staff Accounting Bulletin 121 in place while returning the resolution to the House of Representatives. Its immediate significance extended beyond an accounting dispute: Congress had used the Congressional Review Act to challenge how the SEC established consequential digital-asset policy, and the president sided with the agency’s investor-protection rationale despite bipartisan votes against the bulletin.

What SAB 121 said

SEC staff issued SAB 121 on March 31, 2022, with an effective date of April 11, 2022. It addressed specified SEC-reporting entities responsible for safeguarding crypto assets, including arrangements in which an entity or its agent maintained the cryptographic keys needed to access customer assets.

The bulletin said a covered entity should recognize a safeguarding liability on its balance sheet, measured at the fair value of the crypto assets it was responsible for holding. It also called for a corresponding asset measured on the same basis. Expected disclosures included the nature and amount of safeguarded assets, concentrations, responsibility for cryptographic keys and potential consequences of loss, theft or bankruptcy.

The SEC described staff accounting bulletins as staff interpretations and practices, not Commission rules or interpretations carrying the Commission’s official approval. That distinction became central to the legislative confrontation.

How the dispute reached the White House

On October 31, 2023, the Government Accountability Office concluded that SAB 121 qualified as a rule for Congressional Review Act purposes. GAO found that the bulletin met the Administrative Procedure Act definition incorporated by the review statute and that none of the statute’s exclusions applied. GAO did not decide that SAB 121 was invalid; it determined that the bulletin was subject to the act’s submission requirement and congressional review process.

The House passed H.J.Res. 109 on May 8, 2024 by 228–182, with 19 members not voting. The Senate passed it on May 16 by 60–38, with two senators not voting. Those official tallies demonstrated bipartisan opposition but did not by themselves guarantee the two-thirds majorities required in both chambers to override a presidential veto.

H.J.Res. 109 would have disapproved SAB 121 under the Congressional Review Act. Biden’s May 31 veto prevented that resolution from taking effect unless Congress subsequently overrode him.

The administration’s case

Biden’s veto message characterized SAB 121 as the considered technical view of SEC staff. He argued that using the Congressional Review Act would inappropriately constrain the SEC’s ability to establish safeguards and address future accounting issues, potentially undercutting the agency’s broader authority over accounting practices.

The message also said the administration wanted to work with Congress on a comprehensive and balanced digital-asset framework. That statement expressed a policy position; it did not identify proposed statutory text, a timetable or a negotiated agreement.

The veto did not transform SAB 121 into an enacted custody statute or a formally adopted Commission rule. It preserved the staff guidance and stopped this particular congressional disapproval resolution from becoming effective on May 31.

What remained unresolved on May 31

The event did not establish that banks were legally prohibited from providing crypto custody, quantify the bulletin’s capital effect on any particular institution or prove a causal effect on bitcoin, ether or publicly traded companies. Coinburn found no sufficiently controlled event-window market evidence to make such a claim.

As of May 31, the documented next step was procedural: Congress could consider overriding the veto, which would require a two-thirds vote in each chamber. Any subsequent vote, agency revision or legal outcome belonged to a later record and could not be assumed in the event-day account. The verified conclusion was narrower: the president had rejected Congress’s attempt to nullify SAB 121, leaving the SEC staff position operative at the close of May 31, 2024.