The U.S. Securities and Exchange Commission (SEC) has repealed Staff Accounting Bulletin No. 121 (SAB 121), a controversial policy that prohibited banks and financial institutions from providing custody services for cryptocurrencies. This repeal ushers in a new era of institutional involvement in digital assets, facilitated by the introduction of a replacement framework, Staff Accounting Bulletin No. 122 (SAB 122).
What SAB 121 Repeal Means for Financial Institutions
Under the now-defunct SAB 121, financial institutions faced significant barriers to entering the crypto market. The policy was widely criticized for its restrictive stance, which many argued stifled innovation and excluded banks from participating in the rapidly growing digital asset space. With the introduction of SAB 122, banks and financial entities are now authorized to offer secure custody services for Bitcoin and other cryptocurrencies, addressing a critical demand in the market.
JUST IN
— Swan (@Swan) May 16, 2024– The Senate votes to disapprove of the SEC's SAB 121 which prevents regulated financial institutions from custodying #Bitcoin and other crypo assets.
Will President Biden go through with his threat to veto?
Watch Senator Lummis' scathing remarks about Gary Gensler… pic.twitter.com/0FEj71i86b
Introducing SAB 122: A New Era of Crypto Custody
SAB 122 introduces updated guidelines, allowing banks to manage clients’ cryptocurrency holdings while ensuring investor protection and compliance with SEC standards. This move aligns with broader financial reforms under President Donald Trump’s administration, emphasizing the integration of digital assets into mainstream financial systems.
Hester Peirce: The Voice Behind Change
The announcement was delivered by SEC Commissioner Hester Peirce, a key figure in cryptocurrency advocacy. Known as “Crypto Mom,” Peirce leads the SEC’s cryptocurrency task force and has been a vocal critic of restrictive policies like SAB 121. In her remarks, she celebrated the policy’s repeal, stating, “Bye, bye SAB 121! It’s not been fun.”
Impact on Institutional Crypto Adoption
The repeal of SAB 121 is expected to drive institutional adoption of digital assets, with banks now positioned to provide secure and regulated custody services. Industry analysts predict this shift will boost investor confidence and foster greater integration of cryptocurrencies into traditional financial services.
SEC Adapts to a Changing Financial Landscape
The SEC’s decision to repeal SAB 121 and introduce SAB 122 marks a significant step forward in embracing the evolving cryptocurrency market. As the regulatory framework continues to adapt, this development underscores the growing legitimacy of digital assets in the global economy.
