ARTICLE
31 January 2025

SEC Withdraws Staff Accounting Bulletin No. 121

AP
Anderson P.C.

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Anderson P.C. is a boutique law firm that specializes in defending clients in high-stakes investigations and enforcement actions brought by the SEC, FINRA, the DOJ and other government agencies or regulators. We handle the full spectrum of securities enforcement and regulatory counseling, addressing complex issues involving public companies, senior executives, broker-dealers, financial services professionals, hedge funds, private equity funds, investment advisers, and digital assets.
On January 23, 2025, the SEC issued Staff Accounting Bulletin (SAB) 122, formally withdrawing the controversial SAB 121.
United States Accounting and Audit

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.

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