Key takes
- SEC is replaced by SAB 121 and provides an approach based on the principle of encryption accounting.
- In SAB 122, banks are allowed to use established accounting principles to evaluate and record potential risks related to holding customer code.
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There is in the second of the United States issued Staff accounting bulletin No. 122 (SAB 122), withdraw the specific accounting guidance of custody -custody -specific cigarette assets previously handled in SAB 121. This change takes into account the accounting burden of companies, including regulated banks, and provide Crypto Custom Services.
SEC Commissioner Hester Peirce announced SAB 122 in X and said, “Goodbye, goodbye SAB 121! It was not interesting.” PEIRCE and ACTION SEC Chairman Mark Uyeda is active after the departure of former SEC Chair Gary Gensler. We are leading a newly formed encryption task force aimed at developing a regulatory framework and a practical registration route of Crypto.
SAB 121, released in 2022, is obliged to record these assets on behalf of customers as debt to the balance sheet.
The policy left a safe custody option limited to consumers because the burden of financial stops from providing such services by banks and other financial institutions.
Industry members have argued that SAB 121 had unreasonably hindered the bank organization to provide digital asset services and products compared to other financial institutions.
Efforts have been made to overturn the SEC accounting guidance on custody encryption assets. In February 2024, Mike Flood Representative introduced HJ RES. In the 109 House of Representatives, we are trying to overturn SAB 121 based on the parliamentary examination law. The House of Representatives and Senate have passed HJ RES. May 109.
It was later presented to former President Joe Biden, but he refused to reduce the SEC and take measures to bring risks to investors and consumers.
Under the new SAB 122, banks and other financial institutions are allowed to accidentally apply existing accounting standards when evaluating potential debt.
With the transition from SAB 121 to SAB 122, companies increase the flexibility to determine how to recognize debt related to the detained encryption assets.
Using SAB 122, banks can treat potential losses as conditional debt and detain cipher like bitcoin. This change simplifies regulation compliance and supports the expansion of bank services in encrypted sector.
“SAB 121 is a miserable for the banking industry, hindering the progress of the United States and the progress of digital assets. Senator Cynthia Lamis said:
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