US Banking Lobby Made Last-Ditch Effort to Block SAB 121 Veto

The American Bankers Association (ABA) has surprised many by advocating for cryptocurrency in a letter to President Biden.

Biden angry at crypto trading.
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  • The American Bankers Association (ABA) surprised many with a recent move in support of cryptocurrency.
  • Their argument centers around a regulation seen as hindering banks’ involvement in crypto SAB 121.
  • They argue SAB 121 creates unnecessary hurdles for banks securely storing crypto for their customers.

The American Bankers Association (ABA), the biggest U.S. banking industry lobbying group, was surprised by supporting cryptocurrency just before President Biden vetoed a resolution aimed at overturning a regulation seen as hindering banks’ involvement in the crypto space.

ABA Pushes Back Against Repeal

In a letter to President Biden dated May 31, the ABA argued against the repeal of Staff Accounting Bulletin (SAB) 121, a guideline issued by the Securities and Exchange Commission (SEC) that impacts how digital assets are treated on bank financial statements. 

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The ABA believes that repealing SAB 121 would hinder banks’ ability to offer safekeeping services for cryptocurrencies, ultimately harming investors and the financial system.

“Precluding regulated banking organizations from effectively providing digital asset safeguarding services at scale harms investors, customers, and ultimately the financial system,” the ABA wrote.

While both the House of Representatives and the Senate voted in favor of repealing SAB 121, President Biden used his veto power to keep the regulation in place. The ABA claims that SAB 121 creates a significant hurdle for banks by deviating from how custodial assets are traditionally handled. 

ABA Shifts Their Crypto Stance?

According to the ABA, this could make it difficult for banks to store cryptocurrencies securely for their customers.

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“The SAB 121 represents a significant departure from longstanding accounting treatment for custodial assets and threatens the industry’s ability to provide its customers with safe and sound custody of digital assets,” the ABA explained in their letter.

Furthermore, the ABA argues that limiting banks’ role in the crypto custody market leaves customers with fewer secure options for storing their digital assets, potentially exposing them to greater risk.

This pro-cryptocurrency stance by the ABA is unexpected by some in the industry, particularly considering the organization’s past actions. In December 2023, reports emerged suggesting the ABA collaborated with Senator Elizabeth Warren, a vocal crypto skeptic, on drafting anti-money laundering legislation targeting digital assets.

On the Flipside

  • Some analysts predict a wait-and-see approach from major banks until the regulatory landscape becomes clearer.
  • The debate around crypto custody highlights the ongoing struggle to balance innovation with consumer protection in the digital asset space.

Why This Matters

The American Bankers Association’s shift towards supporting cryptocurrency custody services could be a tipping point for mainstream adoption. By offering secure storage solutions, banks can legitimize the asset class for a wider audience, potentially leading to increased stability and growth in the overall crypto market.

This article dives into President Biden’s vetoing of a resolution to overturn the SEC’s SAB121 rule, a decision that has ruffled feathers in the crypto community:
President Biden’s Veto Shields SEC’s SAB121 Rule from Overturn

If you’re interested in learning more about the potential price increase of Ethereum in June 2024, this article is for you:
Ether Eyes $4,000 in June as Technicals Signal Bullish Trend

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Author
Kyle Calvert

Kyle Calvert is a cryptocurrency news reporter for DailyCoin, specializing in Ripple, stablecoins, as well as price and market analysis news. Before his current role, Kyle worked as a student researcher in the cryptocurrency industry, gaining an understanding of how digital currencies work, their potential uses, and their impact on the economy and society. He completed his Masters and Honors degrees in Blockchain Technology within Esports and Business and Event management within Esports at Staffordshire University.