President Joe Biden has vetoed a resolution limiting the Securities and Exchange Commission’s (SEC) authority over the cryptocurrency sector.

Biden announced the veto Friday (May 31) evening, saying that the legislation would have constrained regulators’ ability to put up guidelines for the crypto industry.

“Appropriate guardrails that protect consumers and investors are necessary to harness the potential benefits and opportunities of crypto-asset innovation,” Biden said.

“My administration is eager to work with the Congress to ensure a comprehensive and balanced regulatory framework for digital assets, building on existing authorities, which will promote the responsible development of digital assets and payment innovation and help reinforce United States leadership in the global financial system.”

The measure would have ended the SEC’s special rules for custodians of crypto assets, a move supported by both the digital asset sector and the banking industry. Congress passed the legislation last month, but the White House had said the president planned to veto it.

The veto follows last month’s passage of the Financial Innovation and Technology for the 21st Century (FIT21) Act by the U.S. House, which establishes a federal framework designed to ensure regulatory certainty for digital assets and provide key protections for consumers.

“The bill, which was first voted to the House floor in 2023, passed the House by a vote of 279 to 136, with 208 Republicans and 71 Democrats voting to approve it,” PYMNTS wrote recently. “Its bipartisan passage shows how far the embattled crypto sector has come, from a regulatory perspective, in America.”

But the adoption didn’t come without controversy. On the morning of the vote, SEC Chair Gary Gensler said the cryptocurrency bill would undermine his agency’s work. 

The legislation, Gensler stressed, “would create new regulatory gaps and undermine decades of precedent regarding the oversight of investment contracts, putting investors and capital markets at immeasurable risk.”

And the Biden administration has also opposed the legislation, saying that it “lacks sufficient protections for consumers and investors who engage in certain digital asset transactions,” at least in its current form.

“Still, the bill passed, providing a glimmer of hope to an industry that has long bemoaned the lack of regulatory clarity around its operations in the U.S,” PYMNTS wrote.