US Securities regulator repeals controversial crypto accounting rules with SAB 122

The US stock market watchdog SEC, under pressure from the crypto sector, has withdrawn the controversial SAB 121 accounting guidelines. The regulator did this by announcing on Thursday the new guidelines in the "Staff Accounting Bulletin (SAB) 122" issue.

A new direction for crypto in the U.S.

The SEC's move marks a major shift in the regulatory landscape of cryptocurrencies in the US. Since the departure of former SEC Chairman Gary Gensler, a new era has begun for the regulation of Bitcoin, Ethereum and other cryptocurrencies.

SAB 121 required banks and other public companies to put customer crypto assets on their own balance sheets as liabilities. This meant that for every million dollars of crypto assets, for example, they had to hold an equal amount in cash. These cash reserves the banks were not allowed to lend out, making them unprofitable.

Less stringent requirements with SAB 122

With SAB 122, this will change. The new guidelines require companies to now follow Financial Accounting Standards Board (FASB) rules or International Accounting Standards (IAS) provisions. This lowers compliance costs and capital requirements for banks, making it easier to hold Bitcoin, Ethereum and other cryptocurrencies.

The relaxations make it possible for more financial institutions to offer crypto services. In addition, banks are given more freedom to manage the risks associated with these assets.

Industry responses

SEC Commissioner Hester Peirce enthusiastically celebrated the repeal of SAB 121 on Platform X (formerly Twitter). "Bye, bye SAB 121! That wasn't fun," she wrote. Peirce, a Republican, will lead a new crypto task force that aims to develop clear and consistent regulations for the industry.

Bloomberg analyst James Seyffart also reacted with relief: "SAB 121 is officially history. And that didn't require a presidential decree. Thank you to Hester Peirce and Commissioner Uyeda! This was the right decision, in my opinion."

Positive impact on Bitcoin

Eric Weiss, CEO of the Bitcoin Investment Group, sees the change as a big boost to the Bitcoin market. "I think this will be a huge catalyst for an increase in the price of Bitcoin in U.S. dollars," he stated.

SAB 121: A controversial past

SAB 121 evoked much opposition within the crypto sector at the time. The issue was even discussed in a resolution of the "Congressional Review Act," which passed both the House of Representatives and the Senate. However, former President Joe Biden vetoed this resolution, blocking further changes at the time.

With the arrival of SAB 122, the way now seems clear for a more flexible and crypto-friendly approach in the United States.