The U.S. Securities and Exchange Commission (SEC) has officially retracted the contentious SAB 121 accounting guidance for cryptocurrencies, a move coinciding with the exit of former chairman Gary Gensler. This withdrawal signals a notable alteration in the regulatory environment for digital assets, which has faced scrutiny and mixed reactions since its introduction.
What Led to the Withdrawal of SAB 121?
The SEC’s decision to rescind SAB 121, which was initially released in 2022, aligns with the publication of Staff Accounting Bulletin No. 122. SAB 121 had required firms holding cryptocurrencies for clients to classify these digital currencies as liabilities in their balance sheets.
How Did Stakeholders Respond to This Move?
The retraction of SAB 121 has sparked positive reactions across the cryptocurrency community and banking sectors. Critics of the original guidance claimed it inflated compliance costs and obstructed banks from offering digital asset custody services. The SEC emphasized that organizations should refer to existing standards from the Financial Accounting Standards Board (FASB) or the International Accounting Standards (IAS) instead.
- The withdrawal of SAB 121 has been hailed as a proactive step towards innovation.
- It alleviates regulatory pressures on banks concerning digital asset custody.
- New leadership under Republican Commissioner Mark Uyeda aims to promote clarity in crypto regulations.
The SEC’s latest action marks the beginning of a revised era in cryptocurrency regulation, as it seeks to establish a more adaptable framework that could enhance the growth potential of the crypto sector.
