SEC Revokes SAB 121 Crypto Accounting Bulletin

The SEC has announced a new guideline called Staff Accounting Bulletin No. 122, which replaces and cancels the previous guidance under Staff Accounting Bulletin No. 121.

The old guidelines discouraged banks from holding Bitcoin in their custody, but the new guideline removes this barrier and allows banks and traditional financial institutions to offer crypto services without facing significant regulatory hurdles.

Under the old guideline, companies that held crypto-assets for their customers were required to recognize an asset and a liability for those holdings on their balance sheets.

However, under the new guideline, companies have the option to evaluate their obligation to safeguard these assets differently, such as through contingent liabilities for potential losses due to theft or fraud.

This change was communicated by SEC commissioner Hester Peirce, who announced on a social media platform that the old guideline, SAB 121, is now being replaced by the new one, SAB 122.