On January 23, 2025, the U.S. Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) No. 122, reversing its controversial 2022 guidance to safeguard crypto-asset holdings. This reversal comes amidst growing pressure from the American Bankers Association (ABA) and a joint congressional resolution to remove barriers that a previous rule imposed on banks and other publicly traded entities.
Controversial reporting requirement
Issued in 2022, SAB 121 required SEC registrants to recognize liabilities for crypto assets held in custody. The guidance was criticized for creating significant financial and operational burdens for banks and other companies and stalling innovation in digital asset products.
The ABA argued that SAB 121 curbed banks’ ability to compete in the digital asset market. Congress attempted to overrule the bulletin in 2024, but former President Biden vetoed the resolution.
A new era in crypto-asset reporting
SAB 122 rescinds SAB 121 and marks a major policy shift. The bulletin removes the requirement to recognize custodial obligations as liabilities at fair value, alleviating some financial reporting complexities for banks and other SEC registrants. The decision aligns with the SEC’s broader goal under the Trump administration of supporting digital asset innovation while maintaining robust oversight.
SEC Acting Chairman Mark Uyeda emphasized that SAB 122 strikes a balance between compliance clarity and encouraging growth in the crypto sector. The reversal has several implications for banks and other public companies, including:
Simplified reporting. Companies holding crypto assets in custody no longer need to recognize fair-value liabilities, reducing balance sheet complexity.
Increased market participation. Removing the financial reporting barriers encourages banks and businesses to innovate and scale digital asset services.
Continued regulatory scrutiny. With the formation of a new crypto task force, companies should expect targeted reviews of compliance practices in the digital asset space.
SAB 122 emphasizes the ongoing need for disclosures under existing SEC regulations. Just days prior to publishing that bulletin, the SEC launched a crypto task force to develop a clear, comprehensive regulatory framework for reporting crypto assets. “We look forward to working hand-in-hand with the public to foster a regulatory environment that protects investors, facilitates capital formation, fosters market integrity, and supports innovation,” said SEC Commissioner Hester Peirce.
Recent executive order
On the same day SAB 122 was announced, President Trump signed an executive order establishing a presidential working group on digital asset markets. The group will develop a federal regulatory framework for digital assets, propose a national digital asset stockpile and recommend modifications to existing regulations. The order explicitly bans the establishment of a central bank digital currency, citing threats to financial stability and individual privacy.
With pro-crypto nominees — including Paul Atkins for SEC Chair and Howard Lutnick for U.S. Department of Commerce Secretary — the White House aims to position the United States as a global leader in digital asset innovation. The group has been charged with safeguarding economic liberty and promoting stablecoin growth. It’s been given six months to submit its recommendations on regulatory and legislative proposals to the president.
Charting the path forward
By reducing reporting complexities and forming a dedicated crypto task force, the SEC is signaling a commitment to fostering innovation while upholding accountability. Many in the financial and business community welcome these recent developments. Contact us to align your company’s reporting practices with the new guidance and prepare for future crypto-asset opportunities and regulatory oversight.
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