Just hours before President Joe Biden vetoed the repeal of the Staff Accounting Bulletin (SAB) 121 on May 31, the American Bankers Association (ABA), the largest lobbying organization for the U.S. banking industry, made a last-ditch effort to influence his decision. In a letter addressed to Biden, the ABA argued that preventing regulated banking organizations from providing digital asset safeguarding services at scale would harm investors, customers, and the financial system.
Arguments Against SAB 121
The ABA emphasized that SAB 121 represents a significant departure from traditional accounting treatment for custodial assets, potentially complicating the industry’s ability to securely manage digital assets for customers. The lobbying group warned that limiting banks’ ability to offer these services would leave customers with fewer well-regulated and trusted options for safeguarding their digital asset portfolios, thereby increasing their risk exposure.
Congressional Votes and Presidential Veto
Despite both the House of Representatives and the Senate voting in favor of repealing the SAB 121 guidance, President Biden exercised his presidential veto authority to prevent the repeal. The ABA’s letter underscored the organization’s stance that the new guidelines could undermine the safety and soundness of digital asset custody services.
Also Read: Biden Reconsiders SAB 121 Veto Amid Rising Crypto Support
ABA’s Surprising Pro-Crypto Stance
The ABA’s pro-crypto position might surprise some in the crypto industry, given the association’s previous involvement in drafting anti-crypto legislation. Last year, reports surfaced that the ABA assisted Senator Elizabeth Warren, a known crypto skeptic, and Senator Roger Marshall in crafting the Digital Asset Anti-Money Laundering Act. Marshall confirmed their collaboration with the ABA, stating, “The first thing that we did is that we went to the American Bankers Association and said ‘help us craft this.'”
