In a landmark decision, the US Securities and Exchange Commission (SEC) has officially rescinded Staff Accounting Bulletin (SAB) No. 121, a controversial rule that had long prevented banks from offering Bitcoin and crypto custody services. This move, announced Thursday, signals a significant shift in the SEC’s approach to regulating Bitcoin and Crypto and paves the way for greater financial integration.
Breaking: 🇺🇸 SEC officially cancels SAB 121, which prevented banks from custody #Bitcoin pic.twitter.com/vcnggkcgml
– Bitcoin Magazine (@bitcoinmagazine) January 23, 2025
Introduced in March 2022 under former SEC Chairman Gary Gensler, SAB 121 required institutions that hold bitcoin and cryptocurrency assets for customers to record such holdings as liabilities on their balance sheets. This accounting standard has created significant operational and financial burdens on banks and custodians, effectively discouraging them from providing bitcoin-related services. The rule has been widely criticized by the cryptocurrency industry and lawmakers, with SEC Commissioner Hester Peirce calling it a “pernicious weed” in April 2023.
“Bye, bye SAB 121! That wasn’t fun,” Peirce wrote in a post on X (formerly Twitter) Thursday, following the SEC’s issuance of Accounting Bulletin No. 122, which formally revokes the guidance.
The SEC’s move to revoke SAB 121 comes just days after Gensler’s resignation and marks the beginning of a new era under Republican leadership. Acting SEC Chairman Mark Uyeda, who assumed the role on Monday, quickly announced the formation of a crypto task force led by Peirce to create clearer and more practical regulatory frameworks for the industry.
“To date, the SEC has relied primarily on enforcement actions to regulate encryption retroactively and reactively, often adopting new and untested legal interpretations along the way,” the agency acknowledged in a statement Tuesday.
With the removal of SAB 121, large banks should now move quickly to integrate Bitcoin and Crypto custody services into their offerings. This is a significant milestone in the financialization of Bitcoin, bringing it closer to mainstream adoption.