The U.S. Securities and Exchange Commission (SEC) has officially withdrawn its controversial guidance SAB 121, opening a new chapter in the regulation of digital assets.
The SEC's Decision to Rescind SAB 121
The SEC announced the withdrawal of SAB 121, introduced in 2022, which required financial institutions to treat crypto assets as liabilities. The new guidance, SAB 122, offers a more flexible approach, allowing the custody of digital assets without recording them as liabilities, but requiring risk disclosure.
Why Was SAB 121 Controversial?
SAB 121 faced criticism from the American Bankers Association and lawmakers for complicating digital asset innovation. Within the SEC, Commissioner Hester Peirce also opposed it as unnecessarily complex. Public and congressional pressure challenged the prior guidance but was maintained by presidential veto.
A Shift in Regulatory Strategy
The rescinding of SAB 121 came under the oversight of the new Acting SEC Chairman Mark Uyeda, who introduced a more flexible approach to crypto regulation. This shift coincided with broader U.S. political support for digital assets.
The withdrawal of SAB 121 marks significant changes in digital asset regulation, easing accounting for financial institutions and encouraging innovation.
