Michaela Alvez
The U.S. Securities and Exchange Commission (SEC) has rescinded its contentious rule requiring financial firms to classify cryptocurrency holdings as liabilities on their balance sheets. In a January 23 Staff Accounting Bulletin (SAB), the SEC announced the removal of its previous interpretive guidance from SAB 121. The SEC’s decision signifies a significant shift in the agency’s approach to crypto regulation, coming on the heels of former Chair Gary Gensler’s departure.
Introduced in March 2022, the crypto sector strongly opposed SAB 121, arguing it would complicate the management of digital assets and create unnecessary administrative burdens.
Over the past year, the crypto industry voiced significant concerns regarding the SEC’s rule. The rule faced widespread criticism for adding complexities to the management and reporting of digital assets. Industry leaders argued that the policy placed unnecessary administrative burdens on firms, stifling growth and innovation within the sector.
In 2024, the tension surrounding SAB 121 escalated when lawmakers took action to repeal the rule. The proposed measure, which gained substantial support from crypto advocates, was aimed at easing regulatory pressures on the industry. However, the repeal was ultimately blocked by former President Joe Biden, who vetoed the bill and cited concerns over potential risks to investors and financial stability.
Crypto Industry Reacts
Since the SEC’s publication of the bulletin, several prominent figures within the crypto industry have weighed in on the revocation of SAB 121.
“Bye, bye SAB 121!” SEC Commissioner Hester Peirce wrote in a January 23 X post. “It’s not been fun,” she added.
Arkansas Congressman French Hill praised the SEC for its decisive actions during its initial week under the Trump administration, calling the rule ‘misguided’ and emphasizing the agency’s commitment to supporting digital assets and fostering innovation in the United States.
“Holding reserves against the assets held in custody is NOT standard financial services practice,” he added.
Pro-crypto Republican Senator Cynthia Lummis also weighed in, offering her perspective on the cancellation of the rule. “SAB 121 was disastrous for the banking industry, and only stunted American innovation and advancement of digital assets,” she wrote.
This move signals the start of a new chapter for how the U.S. handles digital asset oversight under acting Chair Mark Uyeda.
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Michaela has no crypto positions and does not hold any crypto assets. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Magazine and The Shib Daily are the official media and publications of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.
