The U.S. Securities and Exchange Commission (SEC) has officially withdrawn its controversial SAB 121, marking a pivotal moment in digital asset regulation.
The SEC's Decision to Rescind SAB 121
The SEC announced on Thursday that it was revoking SAB 121, introduced in 2022, which required financial institutions to treat user-held crypto assets as liabilities. The new guidance, SAB 122, offers more flexibility by allowing institutions to custody digital assets without recording them as liabilities.
Why Was SAB 121 Controversial?
SAB 121 faced criticism for complicating digital asset development and limiting innovation. The American Bankers Association contended it restricted the scale development of digital asset products. A joint congressional resolution to overturn it was vetoed by former President Joe Biden.
A Shift in Regulatory Strategy
The rescission of SAB 121 is guided by Acting Chairman Mark Uyeda, promoting a flexible approach to crypto regulation. This aligns with political shifts in the U.S. towards crypto, seen as a positive development within the industry.
With SAB 121 rescinded, financial institutions can simplify their digital asset accounting, potentially fostering a more competitive and diverse digital asset ecosystem.
