The SEC just announced Staff Accounting Bulletin (SAB) No. 122. This bulletin cancels the previous guidance under SAB 121, which discouraged banks from holding Bitcoin for custody. Now, banks and traditional financial institutions can offer crypto services without facing major regulatory hurdles.
Previously, SAB 121 required companies that hold crypto-assets for their customers, like exchanges, to recognize both an asset and a liability on their balance sheets. With the new guidance, companies can assess their responsibility to safeguard these assets differently. They can focus on contingent liabilities, which cover potential losses from theft or fraud.
SEC commissioner Hester Peirce shared her thoughts on social media, saying, “Bye, bye SAB 121! It’s not been fun | Staff Accounting Bulletin No. 122.” This change means banks no longer have to record customer-held crypto-assets, like Bitcoin, as liabilities. It simplifies compliance and reduces the financial burden that came with crypto custody under SAB 121.
ETF analyst James Seyffart expressed his excitement too. He said, “Didn’t even need an executive order! Thank you Hester Peirce and Chairman Uyeda! This was the correct decision in my opinion.” The new guidance allows more banks to safely offer Bitcoin custody services. They can now account for only potential losses as contingent liabilities, giving them the freedom to hold and protect crypto for their customers.
The crypto community is thrilled with this news. For years, US banks have wanted to custody Bitcoin but faced obstacles. Michael Saylor from MicroStrategy also shared his enthusiasm online. Back in May 2024, both the House of Representatives and the Senate passed a resolution to repeal SAB 121, but President Joe Biden vetoed it.
This decision follows the SEC's establishment of a crypto task force led by Hester Peirce. The government has made several pro-crypto announcements lately. Earlier, President Trump signed the first crypto-related executive order, suggesting the US should create a digital asset stockpile. It seems the regulatory landscape for cryptocurrency in the US is finally shifting, which could lead to significant growth for crypto companies in the country.