The SEC has officially rescinded the controversial SAB 121 and introduced new guidelines under SAB 122, marking a pivotal moment in digital asset regulation.
SEC's Decision to Rescind SAB 121
Last week, the SEC announced the rescission of SAB 121, which was introduced in 2022 and required financial institutions to treat cryptocurrency assets held for platform users as liabilities. The new directive under SAB 122 offers a more flexible approach, allowing institutions to custody digital assets without recording them as liabilities, but with required disclosures of associated risks.
Why Was SAB 121 Controversial?
SAB 121 faced resistance from financial organizations and lawmakers. The American Bankers Association argued it restricted banks' ability to develop digital asset products. SEC Commissioner Hester Peirce claimed it added unnecessary complexity and hindered crypto sector growth.
A Shift in Regulatory Strategy
The rescinding of SAB 121 occurred under the guidance of SEC Acting Chairman Mark Uyeda. This move has been positively received within the crypto industry and signals the SEC's shift towards a more supportive regulatory approach.
With the rescission of SAB 121 and implementation of more flexible guidelines, the SEC is making strides towards fostering growth in the crypto industry by simplifying accounting processes for banks and encouraging a competitive and diversified digital asset market.
