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bonk
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bitcoin
Bitcoin (BITCOIN)
$95,980 -0.45%
ethereum
Ethereum (ETHEREUM)
$2,625 -0.31%
binancecoin
BNB (BINANCECOIN)
$614.30 -1.63%
solana
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ripple
XRP (RIPPLE)
$2.40 -0.96%
shiba-inu
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pepe
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bonk
Bonk (BONK)
$0.000017 -3.27%
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SEC Rescinds SAB 121 Rule, Easing Crypto Custody Accounting for Banks

Highlights:

  • SEC’s rescindment of SAB 121 offers banks greater flexibility in crypto asset management.
  • Commissioner Peirce supports the change, calling SAB 121 restrictive and innovation-stifling.
  • Lawmakers praise repeal, arguing it restores balance and encourages U.S. digital asset growth.

On January 23, the US Securities and Exchange Commission (SEC) released a bulletin confirming that Staff Accounting Bulletin (SAB) 122 has officially rescinded SAB 121. SAB 121 required financial firms holding crypto to record it as liabilities on their balance sheets and faced strong opposition from the crypto industry. 

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Under SAB 122, banks and financial institutions can use existing accounting rules for contingencies when assessing potential liabilities. This provides more flexibility in handling crypto assets like Bitcoin. The change helps simplify compliance and allows banks to offer more crypto services.

This move followed Gary Gensler’s exit as SEC chair earlier in the week. Republican Commissioner Mark Uyeda became acting chair of the SEC on Monday. The following day, Uyeda revealed the creation of a crypto task force, appointing fellow Republican Commissioner Hester Peirce to lead it.

Peirce expressed her support for the decision. On Thursday, she shared on X (formerly Twitter), saying, “Bye, bye SAB 121! It’s not been fun.” Peirce had previously criticized the policy for being too rigid and hindering innovation growth.

SEC Repeals SAB 121 Under Trump’s Pro-Crypto Administration

Since its introduction, SAB 121 has faced criticism from the crypto industry and bipartisan members of Congress. Critics argued that the rule was introduced without adequate public consultation and targeted digital asset firms. The banking industry also raised concerns, stating that the rule hindered their ability to offer custodial services for digital assets.

Last year, Congress attempted to repeal SAB 121 with a bipartisan resolution, which passed both the House and Senate. However, President Joe Biden vetoed it. The rule remained in effect until Thursday, following the leadership change at the SEC and the start of a new administration under pro-crypto President Donald Trump, who has expressed his intention to make the U.S. a crypto hub.

Lawmakers Celebrate Rescindment of SAB 121

House Financial Services Committee Chair French Hill praised the rescindment of SAB 121, labeling it “misguided.” Holding reserves against the assets held in custody is NOT standard financial services practice,” Hill said.

Senator Cynthia Lummis stated that SAB 121 harmed the banking industry and hindered U.S. innovation in digital assets. She expressed excitement over its repeal and praised the SEC for returning to its core mission.

She said:

“SAB 121 was disastrous for the banking industry, and only stunted American innovation and advancement of digital assets. I am THRILLED to see it repealed and get the SEC back on track to fulfilling its intended mission.”

Moreover, Paige Pidano Paridon, co-head of regulatory affairs at the Bank Policy Institute, commented on the decision. She noted that it would enable banks to regain their ability to serve as secure custodians of digital assets.

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