SEC Ends SAB 121 Rule, Paving Way for Crypto Growth: Report

• The SEC withdraws SAB 121, removing the requirement to list client-held crypto as liabilities.
• The crypto industry celebrates the move, calling SAB 121 an unnecessary compliance burden.
• SEC’s decision signals hope for more balanced and equitable crypto regulations.

The SEC has finally withdrawn SAB 121, the rule that caused much debate, stating that financial institutions with cryptocurrencies for clients should include the assets on their balance sheets as liabilities. The crypto industry has applauded this move, and the sector has always claimed that the rule was an unnecessary extra compliance requirement.

The decision was published in the Staff Accounting Bulletin on January 23. This is quite a shift from the position that the SEC has taken in the past. The revised guidance reaffirms that the guidance set out in SAB 121, published in March 2022, is no longer available in an interpretive framework.

Shifting Regulatory Landscape

“Bye, bye SAB 121!” SEC Commissioner Hester Peirce, a prominent voice on crypto issues at the agency, commented on X’s post. She said, “It’s not been fun,” a statement of relief and hope from one of the SEC’s top officials.

The crypto community was quick to respond to the proposed SAB 121. The rule was that any company with cryptocurrencies for its clients was to treat these as liabilities. Experts claimed that this was misleading as to the actual state of digital assets and created major practical problems for companies trying to conform.

Related: SEC acting Chair Mark Uyeda launches Crypto Task Force

An attempt to repeal SAB 121 has risen in the past year, even with congressional support. A repeal bill was first proposed in the House and the Senate but was later rejected by President Joe Biden in June of 2024. The House tried to overturn the veto but could not secure enough votes, making the crypto industry unhappy.

SEC’s Policy Shift

SAB 121 is the first significant policy change in the cryptocurrency arena under the watch of acting SEC Chair Mark Uyeda. The move is another victory for the crypto community, which has been asking for more relaxed rules to govern the sector.

With SAB 121 now out of the picture, the crypto community is optimistic about more tolerant regulation. Financial companies and crypto supporters view its repeal as progress. It paves the way for clearer and more balanced legislation on digital assets in the United States.

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