SEC revokes SAB 121

The Securities and Exchange Commission (SEC) has officially revoked the contentious Staff Accounting Bulletin 121 (SAB 121), which mandated financial firms to classify cryptocurrency holdings as liabilities on their balance sheets.  

This decision was announced on January 23, 2025, through a new Staff Accounting Bulletin that rescinds the previous interpretive guidance.  

SAB 121, introduced in March 2022, faced significant criticism from the crypto industry and financial experts who argued it was not aligned with standard financial practices.  

“Bye, bye SAB 121! It’s not been fun,” stated SEC Commissioner Hester Peirce, who leads the agency's crypto task force, expressed relief over the cancellation.  

House Financial Services Committee Chair French Hill also welcomed the move, emphasising that holding reserves against crypto assets is not typical in financial services.  

Critics of SAB 121 had previously warned that it could hinder American banks from effectively managing crypto exchange-traded products, potentially increasing risks by pushing custody services to non-bank entities.  

The revocation of SAB 121 marks a notable shift in regulatory stance under the current SEC leadership and follows a failed bipartisan effort to repeal the rule last year, which was vetoed by former President Joe Biden.