The United States Securities and Exchange Commission (SEC) has canceled the controversial Staff Accounting Bulletin 121 (SAB 121).
In an interesting development, the SEC issued a new Staff Accounting Bulletin yesterday, SAB 122. This latest bulletin rescinds the guidance in Topic 5.FF related to accounting for obligations to safeguard crypto-assets held for platform users—a key element of SAB 121.
For context, SAB 121 required financial institutions holding crypto-assets on behalf of their customers to declare these assets as liabilities on their balance sheets.
Industry Reactions to SAB 121 Repeal
Expectedly, policymakers and crypto enthusiasts have reacted to the cancellation of SAB 121.
French Hill, Chairman of the House Financial Service Committee, expressed excitement that the SAB 121 rule has been rescinded. According to him, holding reserves against digital assets held in custody is not a standard financial practice.
He commended the new SEC leadership for rescinding the rule and supporting digital assets and innovation in the U.S.
SEC Commissioner Hester Peirce, popularly known as Crypto Mom, celebrated the repeal. She bid the rule farewell, noting that the measure ‘has not been fun.’
Meanwhile, Attorney John Deaton, a former U.S. senate candidate, suggested that Peirce’s comment reflects a rejection of former SEC Chair Gary Gensler’s approach to crypto. He suggested that her comment is similar to directing the figurative middle finger to Gensler.
We all know Crypto Mom is way too professional, polite and nice to say it the way we say it. But her posting this is her way of saying 🖕 to @GaryGensler. I truly believe she has had the most frustrating job in government during the last 5-6 years. https://t.co/bVStC49tFV
— John E Deaton (@JohnEDeaton1) January 24, 2025
Furthermore, Senator Cynthia Lummis, the chair of the Senate Banking Digital Asset Subcommittee, also celebrated the SEC’s decision to repeal SAB 121. She labeled the rule a disaster for the banking industry, emphasizing that it had a negative impact on U.S. innovation.
Controversies Surrounding SAB 121
Since the SEC introduced the rule in March 2022, SAB 121 has been the subject of controversy. Crypto enthusiasts and U.S. lawmakers opposed the measure, emphasizing that it would hinder innovation in the industry and make crypto custody difficult.
Last year, lawmakers voted against SAB 121 to repeal the measure. Despite this effort, former U.S. President Joe Biden vetoed the action on June 1, 2024. Attempts to override Biden’s veto ended in futility, as the move did not receive the necessary support from lawmakers.
The repeal came just days after Gensler resigned from the SEC, prompting President Trump to appoint Mark Uyeda as acting chair. Since his appointment, Uyeda has been making big moves related to crypto.
Earlier this week, he launched a crypto task force to develop a regulatory framework for digital assets. His goal is to change the commission’s enforcement-driven approach to crypto and establish clear and fair rules for the industry.
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