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Authored by Tom Mitchelhill via CoinTelegraoph.com,

The United States House of Representatives has voted to pass a bill that overturns controversial Securities and Exchange Commission guidance preventing banks from owning crypto. 

On May 8, the House voted to pass a bipartisan bill dubbed H.J. Res 109 which overturns the SEC’s Special Accounting Bulletin (SAB 121) that requires banks to hold their customers’ crypto assets on their balance sheets – which is not the case for traditional assets such as securities. 

Republican Congressman Mike Flood – the lawmaker who introduced the resolution – said SAB 121 was unfair for banks looking to custody crypto, as custodial assets are “always considered off-balance sheet."

Notably, 21 Democrats voted in favor of the bill – which combined with the unanimous 207 votes from Republicans – saw the bill pass 228 votes to 182. 

Source: Caitlin Long/X

Introduced by the SEC in March 2022, SAB 121 outlines the regulator’s accounting guidelines for institutions looking to custody crypto assets. Notably, SAB 121 virtually prevents banks from custodying crypto assets on behalf of clients.

U.S. lawmakers including SEC Commissioner Hester Peirce have argued SAB 121 jeopardizes the willingness of regulated banks to act as crypto custodians and treats crypto holdings differently than other assets.

Despite the bill being passed through the House of Representatives, President Joe Biden stated he will veto the new bill.

In a May 8 statement, the White House said it “strongly opposes” members of the House of Representatives looking to overturn SAB 121, claiming it would disrupt the SEC’s efforts “to protect investors in crypto-asset markets and to safeguard the broader financial system.”

Source: White House

No lesser mortal than key House Democrat Rep. Maxine Waters thought Flood's resolution went too far.

As CoinDesk reports, when an agency rule is reversed under the Congressional Review Act, it's not only erased, but anything similar is forever blocked from future implementation.

Waters argued that SAB 121 – apart from the controversial custody component – also provided guidance on crypto disclosures that are necessary and would be threatened if Congress overturns the policy, and Biden echoed the concern about policies that would be blocked.