SEC Rescinds SAB 121 Through Staff Accounting Bulletin 122
The SEC issued Staff Accounting Bulletin 122, rescinding the controversial crypto-custody accounting guidance in SAB 121. The change removed a significant accounting obstacle that had discouraged banks and other regulated firms from offering digital-asset custody services.
The Securities and Exchange Commission issued Staff Accounting Bulletin 122 on January 23, rescinding the crypto-asset safeguarding guidance contained in SAB 121. The new bulletin became effective on January 30.
SAB 121 had instructed public companies safeguarding crypto assets for customers to recognize a corresponding liability and asset on their balance sheets. Banks, lawmakers and industry participants argued that the treatment made regulated crypto custody unnecessarily burdensome and discouraged traditional financial institutions from entering the market.
Rescinding the guidance did not itself authorize every bank to offer Bitcoin custody, and firms remained subject to other prudential and securities requirements. But it removed one of the most frequently cited accounting barriers to institutional participation.
For Bitcoin, the change was important because custody is the bridge between regulated financial institutions and direct or indirect Bitcoin ownership. Eliminating SAB 121 materially improved the conditions under which banks and other large firms could evaluate Bitcoin custody services.