The U.S. Securities and Exchange Commission (SEC) has revoked a rule that made it more challenging for financial institutions to manage cryptocurrencies. This change could have significant implications for both the crypto industry and financial service providers.

What was the crypto-accounting rule SAB 121?

In March 2022, the SEC introduced the "Staff Accounting Bulletin 121" (SAB 121). This guideline required financial companies to record digital assets, held on behalf of clients, as liabilities on their balance sheets. While the intention was to increase transparency, the rule drew criticism. Many companies found it cumbersome and viewed it as a barrier to innovation in the sector.

Why has SAB 121 been repealed?

On January 23, 2025, the SEC announced that SAB 121 has been officially repealed. This decision follows years of protests from the crypto industry and the financial sector. According to the SEC, repealing the rule paves the way for a fairer approach to the treatment of crypto assets on balance sheets.

Hester Peirce, an influential voice within the SEC and an advocate for crypto technology, responded enthusiastically. “Goodbye, SAB 121! It was anything but fun,” she wrote. Her response reflects the relief within the sector, which has long called for this change.

What are the implications for financial institutions?

The repeal of SAB 121 is seen as a victory for innovation and growth in the crypto industry. Banks and other financial institutions now have greater flexibility in managing cryptocurrencies without fearing unnecessary administrative burdens.

Senator Cynthia Lummis even described SAB 121 as a “disaster for the banking sector” and praised the decision as a crucial step forward. According to her, this move will not only foster innovation but also strengthen the U.S. position in the field of digital assets.

What does this mean for the future of crypto in Europe and beyond?

While this rule specifically applies to the U.S. market, the news has a broader impact. It demonstrates that regulations around crypto are constantly evolving and that there is room for change when rules prove ineffective.

For European players active in the crypto world, this provides an opportunity to assess how they can adapt to a market where flexibility and innovation are becoming increasingly important.

Conclusion: A step forward for the crypto industry

The repeal of SAB 121 marks an important moment in the relationship between regulation and the crypto industry. It shows that there is room for dialogue and adjustments to ensure that innovation is not stifled.

Disclaimer: This is not financial advice. Always conduct your own research and seek professional guidance.