SEC Axes Crypto Accounting Rule SAB 121

The US Securities and Exchange Commission (SEC) has rescinded a notorious accounting rule that drastically impacted how cryptocurrency is recognised.

Known as Staff Accounting Bulletin (SAB) No. 121, the rule requires companies to list crypto assets on their balance sheets, increasing the expense for financial institutions to deal with cryptocurrencies.

Back in May then-President Joe Biden's vetoed to overturn the bill, stating that it was “necessary to harness the potential benefits and opportunities of crypto-asset innovation.”

A month later, the Houses of Congress attempted to overthrow Biden's veto but were unsuccessful after failing to achieve a two-thirds majority from both houses of Congress in a 228-184.

The White House stated, "The Administration strongly opposes passage of H.J. Res. 109, which would disrupt the Securities and Exchange Commission’s (SEC) work to protect investors in crypto-asset markets and to safeguard the broader financial system."

The SEC argued that SAB 121 is "non-binding staff guidance" and that it strengthens disclosures to investors.

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On 23 January, a new SAB announced the withdrawal of the directive, stating it “rescinds the interpretive guidance” of SAB 121.

SEC Commissioner Hester Peirce applauded the decision, tweeting, "Bye, bye SAB 121! It's not been fun: http://SEC.gov | Staff Accounting Bulletin No. 122."

Describing the previous rule as "misguided," House Financial Services Committee Chair French Hill also welcomed the new ruling.

"Finally, the Biden-Harris misguided SAB 121 rule has been rescinded. Holding reserves against the assets held in custody is NOT standard financial services practice and am pleased this rule was nullified," he said.

"I applaud @SECGov for taking strong steps during their first week under the Trump Administration to support digital assets and innovation in America."

Even MicroStrategy's Micahel Saylor celebrated the news, tweeting, "SAB 121 has been rescinded, allowing banks to custody Bitcoin. 🚀"

Earlier this week, newly-inaugurated President of the United States, Donald Trump, has appointed Mark Uyeda as the acting chair of the SEC. Effective Monday, the Republican temporarily replaces outgoing SEC chair, Gary Gensler, much to the fanfare of the crypto community.

Former SEC Commissioner Paul Atkins was nominated by Trump in December to take on the role as the agency's permanent chair.

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