The Securities and Exchange Commission has rescinded a piece of guidance that had made it more difficult for banks to provide custody services for digital assets.
Under former SEC Chair Gary Gensler, the agency in March 2022 issued Staff Accounting Bulletin No. 121, or SAB 121, which required any custodian of digital assets to report those assets on their balance sheets, thereby raising capital requirements and making it more difficult for banks to offer such services.
Following the change in administration, the SEC under acting Chair Mark T. Uyeda on Jan. 23 issued SAB 122, which repeals SAB 121.
The new guidance directs firms to instead apply the liability provisions outlined by Financial Accounting Standards Board or International Accounting Standard rules.
“The staff reminds entities that they should continue to consider existing requirements to provide disclosures that allow investors to understand an entity’s obligation to safeguard crypto-assets held for others,” the guidance said.
SAB 121 had been controversial since its implementation. In May, both the House and Senate passed a resolution to overturn SAB 121 via the Congressional Review Act, which allows Congress to nullify federal agency regulations. But later that same month, President Joe Biden vetoed the resolution and SAB 121 remained in effect.
However, the new administration is seen as more cryptocurrency-friendly. Soon after being named acting chair, Uyeda established a crypto task force, headed by fellow Republican SEC Commissioner Hester Peirce, aimed at “developing a comprehensive and clear regulatory framework” for cryptocurrencies.