Recently, the SEC granted exceptions to certain banks and broker-dealers from the rules of Staff Accounting Bulletin (SAB) 121, despite existing guidelines. This bulletin outlines accounting and disclosure obligations for companies holding crypto assets for customers.
These exceptions were made because these entities demonstrated to the SEC that their operational models could maintain customer asset ownership even during financial distress, such as bankruptcy. This decision allows these banks and brokerages to exclude customers’ crypto holdings from their balance sheets, provided they manage related risks effectively.
The move sparked backlash within the crypto industry for perceived bias, favoring larger financial institutions over smaller crypto companies. However, it marks a significant development in the ongoing debate over crypto-accounting guidelines and highlights the SEC’s strategic approach to adapting financial regulations to evolving market conditions.
