House Sustains Biden Veto, Leaving SEC Crypto Custody Bulletin Intact

The U.S. House of Representatives failed on July 11, 2024 to override President Joe Biden’s veto of a resolution that would have nullified the Securities and Exchange Commission’s crypto-asset custody accounting guidance. The 228–184 result left Staff Accounting Bulletin 121 in place and ended the immediate congressional route for overturning it.

The House clerk recorded 412 votes cast, with 21 members not voting and none voting present. The 228 affirmative votes represented a calculated 55.3% of votes cast, well below the constitutionally required two-thirds majority. Party totals were 207 Republicans and 21 Democrats in favor, with one Republican and 183 Democrats opposed.

What SAB 121 required

SEC staff issued SAB 121 in March 2022, with an effective date of April 11, 2022. It applied to specified SEC-reporting entities responsible for safeguarding crypto assets for platform users. The bulletin said such an entity should recognize a safeguarding liability on its balance sheet, measured at the fair value of the crypto assets, together with a corresponding asset measured on the same basis.

The bulletin also called for disclosures covering the nature and amount of safeguarded assets, concentrations, responsibility for cryptographic keys, and risks including theft, loss and bankruptcy treatment. The SEC described the document as staff guidance rather than a Commission rule and said it addressed technological, legal and regulatory risks associated with crypto custody.

The Government Accountability Office complicated that characterization on October 31, 2023. GAO concluded that SAB 121 qualified as a rule for purposes of the Congressional Review Act, even though the bulletin was nonbinding staff guidance. That determination supplied the procedural basis for Congress to pursue a resolution of disapproval.

Bipartisan passage did not equal an override majority

Representative Mike Flood introduced H.J.Res. 109 on February 1, 2024. The House initially passed it 228–182 on May 8, and the Senate approved it 60–38 on May 16. Those votes demonstrated bipartisan opposition to SAB 121 but did not establish the larger majorities needed if the president used his veto.

Biden vetoed the resolution on May 31. His recorded veto message argued that using the Congressional Review Act would inappropriately restrict the SEC’s ability to establish safeguards and address future accounting issues. The administration framed the bulletin as an investor-protection measure and said it remained open to a broader digital-asset regulatory framework.

Critics offered a different institutional assessment. Banking trade groups contended in a July 10 letter entered into the congressional debate that placing safeguarded crypto assets and corresponding liabilities on balance sheets created economically prohibitive consequences for regulated banks when combined with capital and liquidity requirements. That was an attributable industry claim, not a quantified finding applying uniformly to every institution.

What the failed vote changed

The July 11 result settled the legal status of H.J.Res. 109: Congress had passed the resolution, the president had vetoed it, and the House had failed to override that veto. A Senate override vote was therefore unnecessary. SAB 121 remained operative under the accounting and disclosure framework described by SEC staff.

The vote did not enact a general crypto-custody law, prohibit banks from holding digital assets or resolve how federal banking regulators would treat every custody arrangement. It also did not prove that SAB 121 alone prevented a particular bank from entering the business. Its immediate significance was narrower but substantial: the most advanced bipartisan attempt to reverse the SEC’s crypto-safeguarding accounting position had reached the end of its legislative path, leaving any modification to subsequent agency action or new legislation.