The U.S. Securities and Exchange Commission (SEC) has officially rescinded Staff Accounting Bulletin 121 (SAB 121) through a new policy called SAB 122, opening doors for American banks to provide cryptocurrency custody services.
The updated framework requires financial institutions to disclose risks and obligations related to crypto asset safeguarding, with changes taking effect for fiscal years after December 15, 2024. Early adoption is permitted.
Under the previous SAB 121 rule implemented in March 2022, banks had to classify customer digital assets as both assets and liabilities on their balance sheets. The new policy allows these to be treated as contingent liabilities instead, substantially reducing capital requirements for financial institutions.
House Financial Services Committee Chairman French Hill praised the decision, noting that holding reserves against custodied assets deviated from standard financial industry practices. SEC Commissioner Hester Peirce also welcomed the change on social media.
The policy shift follows recent leadership changes at the SEC, with Commissioner Mark Uyeda assuming the role of acting chair. This marks a departure from the stricter regulatory approach of former chair Gary Gensler.
Bank of America CEO Brian Moynihan indicated U.S. banks stand ready to embrace crypto custody opportunities under improved regulatory conditions. This development aligns with the newly established Presidential Working Group on Digital Assets Markets, created through an executive order to develop comprehensive crypto regulatory frameworks.
The change represents a major regulatory pivot, potentially accelerating mainstream financial institutions' entry into cryptocurrency services. Industry experts view this as a positive step toward broader digital asset adoption in the United States.