Trump SEC Says Goodbye to Controversial Crypto Accounting Guidance SAB 121.

The Securities and Exchange Commission(SEC) under new leadership chosen by President Donald Trump, announced the withdrawal of a controversial framework that outlined strict disclosure requirements for financial firms holding crypto.

The commission issued Staff Accounting Bulletin (SAB) 122, which rescinds SAB 121 and allows financial institutions that hold crypto on behalf of their customers to determine whether to declare the held digital assets as a liability. SAB 121 required crypto custody providers and exchanges to treat customer holdings as both assets and liabilities, with the latter being based on the high risk associated with holding crypto.

What SEC SAB 122 Changes for Crypto.

The SEC’s new guidance removes the requirements imposed by Topic 5.FF under SAB 121. That bulletin forced crypto platforms to treat their obligation to safeguard users’ assets as liabilities, regardless of whether actual financial risks existed.

However, this was a major sticking point for crypto firms, who had opposed the bulletin due to its alleged complication of accounting practices, which also served to restrict firms from holding crypto. SAB 121- which was implemented in 2022, was also overturned by Congress but was kept in place by a veto by former President Joe Biden.

Bye, bye SAB 121! It’s not been fun,” SEC Commissioner Hester Peirce said in a social media post. Furthermore, the rescinding of SAB 121-which came under acting SEC Chair Mark Uyeda, reflects Trump’s friendlier stance towards digital assets, which the President had touted during his campaigning.

The SEC earlier this week announced the formation of a task force aimed at helping inform crypto regulation. Trump also signed an executive order calling for the formation of a national digital assets reserve, although he did not explicitly mention Bitcoin.

How The SEC Justifies These Decisions.

According to the SEC’s official filing, Staff Accounting Bulletins are not formal rules or legally binding interpretations. Instead, they provide guidance that reflects practices followed by the Division of Corporation Finance and the Office of the Chief Accountant.

Vanessa A. Countryman, Secretary of the SEC, confirmed that SAB 122 has officially replaced SAB 121 in the agency’s regulatory framework. The change has also been codified in Title 17 of the Code of Federal Regulations.

While the text of SAB 122 will not appear directly in the Code of Federal Regulations, the SEC has made updates to its table of Staff Accounting Bulletins to reflect the change.