The U.S. Securities and Exchange Commission (SEC) has officially withdrawn its controversial Staff Accounting Bulletin (SAB 121), marking a significant change in the approach to digital asset regulation.
The SEC's Decision to Rescind SAB 121
The SEC announced the revocation of SAB 121, introduced in 2022, which required financial institutions to account for cryptocurrency assets as liabilities. This led to industry criticism due to developmental challenges. The new bulletin, SAB 122, offers a more flexible approach, allowing custody of digital assets without liability recording but requires risk disclosure.
Why Was SAB 121 Controversial?
SAB 121 faced criticism from the American Bankers Association and bipartisan lawmakers as a barrier to digital asset innovation. Within the SEC, Commissioner Hester Peirce argued that it added unnecessary complexity and confusion.
Changes in Digital Asset Regulation
The rescinding of SAB 121 under SEC Acting Chairman Mark Uyeda marks a more flexible approach compared to the prior harsh stance, allowing banks to offer crypto products and promoting a competitive digital ecosystem.
The withdrawal of SAB 121 and the introduction of SAB 122 herald a new phase in digital asset regulation, fostering a competitive environment and opening the door for financial industry innovation.
