Ability for US banks to custody Bitcoin opened up as SEC retires SAB 121

The US Securities and Exchange Commission (SEC) has made a significant policy shift by introducing the Staff Accounting Bulletin (SAB) 122 to replace the highly criticized SAB 121.

According to a Jan. 23 update, this development will resolve regulatory challenges that previously hindered the crypto custody sector.

SAB 121

SAB 121, introduced under former SEC Chair Gary Gensler, required firms offering crypto custody services to classify customer assets as liabilities on their balance sheets.

This move was criticized for creating unnecessary complexity and deterring banks and financial institutions from entering the crypto custody market. The policy was widely seen as a roadblock to the broader adoption of digital asset services.

At the time, efforts to repeal SAB 121 gained bipartisan support but faced setbacks. Despite passing in both chambers of Congress, former President Joe Biden vetoed the repeal bill, and a subsequent attempt to override the veto was unsuccessful.

SAB 122

The new SAB 122 effectively rescinds these controversial provisions, offering a more accommodating framework.

Financial institutions can now adhere to established standards from the Financial Accounting Standards Board (FASB) or other international accounting guidelines.

The SEC also emphasized the importance of transparency, urging firms to provide disclosures that help investors understand how crypto held on behalf of others is safeguarded.

According to the bulletin:

“An entity that has an obligation to safeguard crypto-assets for others should determine whether to recognize a liability related to the risk of loss under such an obligation, and if so, the measurement of such a liability, by applying the recognition and measurement requirements for liabilities arising from contingencies in Financial Accounting Standards Board Accounting Standards Codification.”

This policy shift, introduced under President Donald Trump and acting SEC Chair Mark Uyeda, represents a notable pivot toward fostering a more supportive regulatory environment for digital assets.

Community welcomes move

The introduction of SAB 122 has been welcomed by regulators and the crypto industry stakeholders.

SEC Commissioner Hester Peirce, a long-time advocate for balanced crypto regulation, expressed her approval, reflecting the relief felt across the sector.

US lawmakers have also praised the move. House Financial Services Committee Chair French Hill described the previous SAB 121 rule as out of sync with standard financial practices, while Senator Cynthia Lummis highlighted its detrimental impact on innovation and banking.

Crypto leaders have noted that the removal of SAB 121 will likely influence how companies account for and disclose their custodial obligations.

Michael Saylor of MicroStrategy observed that this shift allows banks to offer Bitcoin custody while navigating more straightforward compliance requirements.

He wrote:

“SAB 121 has been rescinded, allowing banks to custody Bitcoin.”

The post Ability for US banks to custody Bitcoin opened up as SEC retires SAB 121 appeared first on CryptoSlate.

  • Related Posts

    Ethereum Foundation on-course to earn $1.5 million through allocation of 50k ETH to DeFi

    The Ethereum Foundation has allocated 50,000 ETH to several DeFi platforms amid its shift in treasury management approach. On Feb. 13, the Foundation announced via X that it had deposited…

    Continue reading
    Metaplanet fuels Bitcoin ambitions with $26 million raise as it enters MSCI Japan Index

    Japanese Bitcoin investment firm Metaplanet has secured $26 million (4 billion yen) through the issuance of zero-interest, unsecured, and unguaranteed bonds, according to a Feb. 13 statement. The company intends to…

    Continue reading

    Leave a Reply

    Your email address will not be published. Required fields are marked *

    You Missed

    Ethereum Foundation on-course to earn $1.5 million through allocation of 50k ETH to DeFi

    Ethereum Foundation on-course to earn $1.5 million through allocation of 50k ETH to DeFi

    Metaplanet fuels Bitcoin ambitions with $26 million raise as it enters MSCI Japan Index

    Metaplanet fuels Bitcoin ambitions with $26 million raise as it enters MSCI Japan Index

    Cboe seeks SEC approval for staking in 21Shares Ethereum ETF

    Cboe seeks SEC approval for staking in 21Shares Ethereum ETF

    Empowering emerging markets through tokenised US treasuries

    Empowering emerging markets through tokenised US treasuries

    Retail investor demand for Bitcoin is recovering after January low

    Retail investor demand for Bitcoin is recovering after January low

    Robinhood’s crypto revenue skyrockets 700% amid Bitcoin boom

    Robinhood’s crypto revenue skyrockets 700% amid Bitcoin boom