- SEC withdraws SAB 121 as leadership shifts to pro-crypto policies under Acting Chair Mark Uyeda.
- Crypto industry welcomes the removal of SAB 121 for reducing barriers and promoting innovation.
- New crypto task force aims to bring clarity and predictable regulations under the SEC’s updated approach.
The US Securities and Exchange Commission has officially removed Staff Accounting Bulletin No. 121. This decision comes just days after Gary Gensler stepped down as SEC Chair. SAB 121 was introduced in 2022 and required companies holding cryptocurrencies for clients to recognize these assets as liabilities.
Staff Accounting Bulletin No. 122 issued by the SEC confirms the withdrawal of SAB 121. Now, entities are encouraged to comply with Financial Accounting Standards Board or International Accounting Standards on crypto asset accounting.
Criticism of SAB 121
SAB 121 faced significant backlash from the crypto industry and lawmakers. Critics argued the rule increased compliance costs and deterred banks from offering crypto custody services. The banking sector also raised concerns, stating it limited their ability to provide secure custodial solutions.
Lawmakers criticized the lack of public consultation before the rule’s introduction. They claimed the policy unfairly targeted digital asset firms. Many also viewed the regulation as a barrier to innovation within the cryptocurrency sector.
Leadership and Policy Shift
Gary Gensler, the former SEC Chair, defended SAB 121, citing investor protection during bankruptcies. However, the policy faced opposition in Congress, with attempts to repeal it vetoed by then-President Joe Biden.
The recent leadership change at the SEC under Acting Chair Mark Uyeda reflects a shift in approach. Uyeda has introduced a crypto task force led by Hester Peirce to develop clearer regulations. This move marks a break from the SEC’s reliance on enforcement actions under Gensler’s tenure.
Industry and Lawmaker Reactions
The crypto industry and banking sector have welcomed the withdrawal of SAB 121. They view it as a step toward reducing regulatory burdens and fostering innovation. Lawmakers who opposed the rule have also expressed support for its removal.
The decision aligns with the goals of the new administration under pro-crypto President Donald Trump. His administration aims to position the US as a leader in the global cryptocurrency market.
