The SEC repeals SAB 121 opens the door for banks to offer crypto custody services. This move marks a new era for crypto in traditional finance.
SEC Repeals SAB 121, Opens New Era for Crypto in Traditional Finance
The Securities and Exchange Commission (SEC), under the leadership of acting chair Mark T. Uyeda, has repealed Staff Accounting Bulletin 121 (SAB 121), a key regulation that previously restricted banks from offering cryptocurrency services. This action marks a significant shift in the relationship between traditional financial institutions and the crypto market.
Repeal of SAB 121 Removes Obstacles for Banks Offering Crypto Services
SAB 121, introduced in March 2022, required banks to account for crypto-asset custody as part of their balance sheets, imposing significant costs and regulatory challenges. The repeal now enables banks and other financial institutions to offer crypto services, including custody, without the burden of the previous accounting guidelines.
Congressional Backlash and Presidential Veto
The guidance was controversial, with bipartisan congressional support for its repeal. Earlier this year, a Congressional Review Act (CRA) aimed to overturn SAB 121, but it was vetoed by President Biden, who expressed concerns about limiting the SEC’s regulatory authority. Despite this, the SEC’s recent decision to rescind the bulletin has effectively removed one of the last significant barriers for banks to engage in crypto.
Industry Reactions
SEC commissioner Hester Peirce, known for her pro-crypto stance, welcomed the repeal, saying, “Bye, bye SAB 121! It’s not been fun.” Senator Cynthia Lummis also celebrated the change, noting that the previous regulations had stifled innovation in the U.S. banking industry and crypto sector.
The repeal of SAB 121 opens new opportunities for financial institutions and their customers. Watch for further developments as banks begin to offer crypto-related services.
