SEC Rescinds SAB 121, Issues SAB 122; Banks Can Now Custody Crypto

Jan 23, 2025, 11:23 PM

The U.S. Securities and Exchange Commission (SEC) has officially rescinded Staff Accounting Bulletin No. 121 (SAB 121) and issued SAB 122, effectively removing previous accounting guidance that blocked banks from offering cryptocurrency custody services. This significant regulatory shift allows banks and other financial institutions to custody Bitcoin and other crypto assets for their customers. By eliminating the requirement for banks to treat customer-held crypto assets as liabilities on their balance sheets, the SEC has reduced capital requirements and regulatory hurdles. The move is expected to pave the way for broader institutional adoption of cryptocurrencies, offering access to digital assets for millions of bank customers. The reversal comes days after SEC Chair Gary Gensler's departure, signaling a potential change in the commission's approach to crypto regulation.