SEC Withdraws Controversial Crypto Bulletin

SEC Withdraws Crypto Financial Reporting Guidance

• The SEC withdrew Staff Accounting Bulletin 121, which required banks to mark customers’ crypto assets on their balance sheets.
• SAB 122 rescinds SAB 121 and directs firms to follow Financial Accounting Standards Board or International Accounting Standard rules.
• Former SEC Chair Gary Gensler supported SAB 121, citing investor protection in bankruptcies.
• SAB 121 faced opposition from the crypto industry and was challenged by a Congressional Review Act resolution.
• SEC Commissioner Hester Peirce opposed SAB 121, arguing it was not the right vehicle for such guidance.

The SEC’s withdrawal of SAB 121, announced by Commissioner Hester Peirce, shifts guidance to established accounting standards rather than requiring firms to mark crypto assets on their balance sheets. This decision follows significant industry opposition and legislative challenges.