
The US Securities and Exchange Commission (SEC) has announced the withdrawal of a contentious accounting framework that imposed stringent disclosure requirements on financial firms holding cryptocurrencies on behalf of clients.
The new directive, Staff Accounting Bulletin (SAB) 122, supersedes the previous SAB 121, granting financial institutions discretion in classifying held digital assets as liabilities.
SAB 121, enforced in 2022, mandated that crypto custody providers and exchanges recognise customer holdings as liabilities, reflecting the risks of holding cryptocurrencies.
The Commission clarified that entities should now assess any liabilities related to safeguarding risks under broader accounting standards such as FASB ASC Subtopic 450-20 or IAS 37.
According to the SEC’s bulletin, as reported by Binance, entities are required to apply this change retroactively for fiscal years beginning on or after 15 December 2024.
The rescission can also be adopted earlier for interim or annual filings submitted following the release of SAB 122.
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By GlobalDataSAB 121 framework faced resistance from the crypto industry, which criticised it for complicating accounting practices and hindering firms from holding digital assets.
Despite being overturned by Congress, SAB 121 remained effective due to a veto by former President Joe Biden.
The shift under acting SEC chair Mark Uyeda is seen as a nod to President Donald Trump’s more accommodating stance towards digital assets, a position he promoted during his campaign.
The SEC has initiated a task force to contribute to the shaping of crypto regulation.
Additionally, President Trump signed an executive order to establish a national digital assets reserve, though the order did not specifically reference Bitcoin.
In separate news, the SEC, approved an amendment from the Public Company Accounting Oversight Board (PCAOB) in January 2025, that establishes a new procedure for registering non-operational accounting firms.
This change will take effect starting with annual reports and fees due in 2025.