The U.S. Securities and Exchange Commission has rescinded Staff Accounting Bulletin 121 (SAB 121), a rule that requires banks to classify bitcoin and other digital assets as liabilities on their balance sheets. Introduced in 2022, SAB 121 imposed strict capital requirements and raised financial risks for institutions offering crypto custody services. These regulatory burdens discouraged Wall Street banks from expanding into digital assets beyond derivatives trading and exchange-traded funds. The crypto industry had long lobbied against the rule, and bipartisan efforts in Congress sought its repeal, though a previous attempt was vetoed by then-President Joe Biden. The SEC’s decision follows the recent departure of former Chair Gary Gensler, who had defended SAB 121 as necessary for investor protection.
The announcement comes amid shifting regulatory sentiment toward cryptocurrencies under the new administration. SEC Commissioner Hester Peirce, who now leads a task force focused on crypto regulations, welcomed the decision. At the World Economic Forum in Davos, financial leaders, including Goldman Sachs CEO David Solomon, suggested they would reconsider digital asset strategies if regulations changed. The move aligns with President Donald Trump’s pro-crypto stance, which could encourage financial institutions to expand their digital offerings in the near future.
