After Gensler resigned, the US Securities and Exchange Commission revoked SAB 121 – a controversial Staff Accounting Bulletin.
The rule has been widely criticized for requiring banks to include crypto as liabilities on their balance sheets.
On Jan. 23, announced that the new SAB “rescinds” the SAB 121 rule. The Commission clarified that entities must now determine liabilities related to safeguarding risk under broader accounting principles.
In its bulletin, the SEC stated that “Entities should retroactively implement this change for all annual periods beginning after December 15, 2024.”
Vanessa A. Countryman confirmed that SAB 122 officially replaced SAB 121 as the regulatory framework.
“Bye-bye SAB121!” Hester Peirce wrote, “It’s been no fun: SEC,” a US SEC commissioner.
Peirce had previously referred to the SAB 121 as a “pernicious weed,” criticizing Gensler’s approach to regulating this industry. She said in an event on April 2024 that rules with such a broad impact “should be established by the entire Commission”, and not just the staff who report to the Chairman.
Wyoming Senator Cynthia Lummis dubbed the SAB 121 as “disastrous” for the banking industry. The Bulletin, she said on X, “only stunted American Innovation and Advancement of Digital Assets.”
I am thrilled to see the SEC get back on track and fulfill its mission.
Then, President Joe Biden vetoed the vote of lawmakers to repeal SAB 121
voted on May 16, 2024 to overturn the Accounting Bulletin. Former President Joe Biden, however, vetoed this resolution a few months later. He defended SAB 121 by stating that it was a “considered” technical judgment made by SEC staff.
Circle CEO Jeremy Allaire recently criticised SAB 121 and said that it was “punitive” for financial institutions, corporations, and banks to even hold crypto assets in their balance sheets.
He predicted that the crypto-executive order would closely monitor to rescind crypto accounting guidance. Allaire, speaking at the Davos World Economic Forum said: “I am strongly in favor of repealing this and I hope that President Trump will take that action.”
