The Securities and Exchange Commission (SEC) revoked Staff Accounting Bulletin 121 (SAB 121) on January 23, which has caused concerns in the crypto industry.
The rule required financial companies holding cryptocurrency for customers to record those assets as liabilities. Introduced in March 2022, the rule faced pushback for complicating crypto operations.
SEC Commissioner Hester Peirce expressed her relief in a January 24 post on X, saying, “Bye, bye SAB 121! It’s not been fun”.
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The decision to cancel the rule also drew praise from lawmakers. In a post on X, Senator Cynthia Lummis welcomed the change, stating:
I am THRILLED to see it repealed and get the SEC back on track to fulfilling its intended mission.
She described the rule as harmful to the banking industry and a barrier to innovation in digital assets.
French Hill, Chair of the House Financial Services Committee, called the SEC's decision "strong steps", stating that requiring reserves against customer-held assets went against standard financial practices. He said:
Holding reserves against the assets held in custody is NOT standard financial services practice and am pleased this rule was nullified.
Although the bill to repeal SAB 121 initially gained approval, it was vetoed by then-President Joe Biden on June 1, 2024.
The new Staff Accounting Bulletin finally put an end to the rule under the leadership of acting SEC Chair Mark Uyeda, appointed during Donald Trump’s presidency.
Meanwhile, President Trump recently signed an executive order addressing cryptocurrency. What did the order highlight? Read the full story.
