On January 23, 2025, the SEC issued Staff Accounting Bulletin (SAB) 122, formally withdrawing the controversial SAB 121. The previous guidance, introduced under the leadership of former SEC Chair Gary Gensler, required public companies, including banks, to record customers' cryptocurrency holdings on their own balance sheets. This requirement was intended to provide added investor protections during bankruptcies but faced criticism for its potentially burdensome implications for institutions handling digital assets.
SAB 122 replaces this guidance, instructing firms to follow established accounting standards from the Financial Accounting Standards Board (FASB) or the International Accounting Standards (IAS). In its announcement, the SEC emphasized that entities remain obligated to disclose information that allows investors to understand how crypto assets are safeguarded.
This change reflects a shift toward a more flexible regulatory approach, balancing investor protections with the operational realities of financial institutions.
For more details, the full text of SAB 122 can be accessed here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.