The U.S. Securities and Exchange Commission (SEC) has officially withdrawn the controversial Staff Accounting Bulletin SAB 121, marking a turning point in digital asset regulation.
The SEC's Decision to Rescind SAB 121
On Thursday, the SEC announced the revocation of SAB 121, introduced in 2022, which required financial institutions to treat cryptocurrency assets held for platform users as liabilities on their balance sheets. The new guidance, SAB 122, offers a more flexible approach, allowing institutions to custody digital assets without recording them as liabilities.
Why Was SAB 121 Controversial?
SAB 121 faced criticism for restricting banks' ability to develop digital asset products. The American Bankers Association argued it created barriers to innovation. Criticism also came from bipartisan lawmakers and SEC Commissioner Hester Peirce, who claimed it added unnecessary complexity and hindered the crypto sector's growth.
A Shift in Regulatory Strategy
The rescission of SAB 121 comes under Acting SEC Chairman Mark Uyeda, who has adopted a more flexible approach to cryptocurrency regulation. This change aligns with a more favorable U.S. political climate for crypto, as the presidential administration considers easing digital asset regulations.
The overturning of SAB 121 opens new avenues for financial institutions and may lead to a more competitive digital asset ecosystem. Industry leaders welcomed this as a move towards supporting innovation.
