SEC Introduces SAB 122 to Replace SAB 121
The US Securities and Exchange Commission (SEC) has recently implemented a new policy shift by replacing the controversial Staff Accounting Bulletin (SAB) 121 with the more flexible SAB 122.
Background on SAB 121
- Introduced under former SEC Chair Gary Gensler
- Required firms to classify customer assets as liabilities
- Criticized for complexity and hindering market entry
SAB 121 was considered a hindrance to the broader adoption of digital asset services, with bipartisan support for its repeal facing challenges.
Introduction of SAB 122
- Rescinds controversial provisions of SAB 121
- Offers a more accommodating framework for financial institutions
- Emphasizes transparency and adherence to established standards
Under SAB 122, entities safeguarding crypto-assets for others must determine liability and provide necessary disclosures as per recognized accounting guidelines.
Positive Reception from the Community
- Regulators and industry stakeholders welcome the move
- SEC Commissioner Hester Peirce expresses approval
- US lawmakers and crypto leaders praise the decision
The removal of SAB 121 is expected to impact how companies handle custodial obligations, with Michael Saylor noting the potential for banks to offer Bitcoin custody with simplified compliance requirements.