SEC Rescinds Rule Blocking Banks from Custodying Bitcoin

The US Securities and Exchange Commission (SEC) has rescinded a rule that prevented banks from custodying cryptocurrencies.

The rule, known as Staff Accounting Bulletin (SAB 121) was introduced by former SEC chair Gary Gensler. It required banks and other financial institutions to list crypto assets as liabilities in their sheets.

As expected, SAB121 was highly controversial. Most believed the complexities involved deterred banks from being involved in crypto custody. It was largely considered the SEC’s attempt to discourage corporate participation in the crypto market. However, the regulator has introduced a new policy, which paves the way for massive adoption.

What is SAB 122?

The new policy, SAB 122, provides an accommodating structure and enables banks and other financial institutions to observe international accounting standards or those from the Financial Accounting Standards Board (FASB).

This staff accounting bulletin (“SAB”) rescinds the interpretive guidance included in Section FF of Topic 5 in the Staff Accounting Bulletin Series entitled Accounting for Obligations to Safeguard Crypto-Assets an Entity Holds for its Platform Users (“Topic 5.FF”),” the regulator explained.

The SEC requires banks to provide clients with details on the risks involved with custody assets. The bulletin wrote, “An entity that must safeguard crypto-assets for others should determine whether to recognize a liability related to the risk of loss under such an obligation and if so, the measurement of such a liability, by applying the recognition and measurement requirements for liabilities arising from contingencies in Financial Accounting Standards Board Accounting Standards Codification.”

Several key voices in crypto, such as Hester Peirce, hailed the new policy as a step in the right direction. Others believe SAB 122 could encourage companies to associate better with crypto.

Trump’s return to the White House has no doubt been a major win for the industry. The new administration has made several pro-crypto moves, including announcing plans to make the US the crypto capital of the world.

Disclaimer

The information discussed by Altcoin Buzz is not financial advice. This is for educational, entertainment, and informational purposes only. Any information or strategies are thoughts and opinions relevant to the accepted levels of risk tolerance of the writer/reviewers and their risk tolerance may be different than yours. We are not responsible for any losses that you may incur as a result of any investments directly or indirectly related to the information provided. Bitcoin and other cryptocurrencies are high-risk investments so please do your due diligence. Copyright Altcoin Buzz Pte Ltd.