TL;DR

The SEC revokes SAB 121, allowing financial institutions to manage digital assets without recording them as liabilities, signaling a major regulatory shift.
The introduction of SAB 122 provides more flexible guidelines, reducing compliance costs and facilitating easier crypto custody services for banks.
The crypto market reacted positively, with significant gains in Bitcoin, Ethereum, Solana, and Dogecoin, while industry leaders and lawmakers celebrated the decision.

The U.S. SEC announced the revocation of Staff Accounting Bulletin No. 121, a controversial rule that had mandated financial institutions to record digital assets held for clients as liabilities on their balance sheets. This move, which has been met with widespread approval from the crypto community, signals a significant shift in the regulatory landscape under President Donald Trump’s administration.

Introduction of SAB 122

The SEC introduced a new bulletin, SAB 122, which replaces the stringent requirements of SAB 121 with more flexible guidelines. Under SAB 122, financial institutions can now use standard accounting principles, such as those outlined by the Financial Accounting Standards Board and International Accounting Standards, when managing digital assets. This change is expected to reduce compliance costs and make it easier for banks to offer crypto custody services.

Market Reaction

The revocation of SAB 121 has had an immediate and positive impact on the crypto market. Bitcoin (BTC) surged to $105,235.06, reflecting a 3.29% increase over the past 24 hours. Ethereum (ETH) also saw significant gains, rising by 5.93% to $3,400.04.

Other top cryptocurrencies, including Solana (SOL) and Dogecoin (DOGE), experienced notable increases, with SOL up by 8.40% and DOGE by 3.84%. XRP and ADA also reported gains, increasing nearly 4% and trading at $3.19 and $1, respectively.

Industry and Lawmaker Reactions

The decision to revoke SAB 121 has been celebrated by industry leaders and lawmakers alike. SEC Commissioner Hester Peirce, known for her pro-crypto stance, expressed her satisfaction on social media, stating, “Bye, bye SAB 121! It’s not been fun”.

The banking sector has also welcomed the change, with Paige Pidano Paridon from the Bank Policy Institute highlighting that the decision restores banks’ ability to serve as secure custodians of digital assets.

Future Implications

The introduction of SAB 122 and the revocation of SAB 121 mark a significant victory for the crypto industry. By reducing regulatory burdens and fostering a more business-friendly environment, the SEC’s decision is expected to drive further innovation and adoption in the digital asset space.

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Filed under: News - @ January 24, 2025 12:22 pm