May 31, 2024 - Business

Biden vetoes Congress’s crypto custody bill

President Biden in a blue suit outside the White House.

Photo: Samuel Corum / Getty

President Biden vetoed legislation that struck down the Securities and Exchange Commission's special rules for custodians of crypto assets, as expected.

Why it matters: The SEC policy could be a major impediment to traditional financial companies offering services that involved holding onto customers' cryptocurrency.

Catch up fast: The legislation was passed by both chambers of the U.S. Congress with a Senate vote on May 16.

What they're saying: "My Administration is eager to work with the Congress to ensure a comprehensive and balanced regulatory framework for digital assets, building on existing authorities," President Joe Biden wrote in a statement accompanying his veto.

Context: Critics of the legislation have pointed out that the clock had actually run out for Congress to review the procedural action by the SEC, under the Administrative Procedure Act.

Of note: Traditional finance organizations wrote the President today urging him to support Congress's effort to remove the rule. They argue the rule will make it too expensive for regulated entities to participate in the custody business, to the detriment of their customers.

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