SAB 121 Faces Industry Pushback
SAB 121 made the banks consider digital assets to be liabilities in their balance sheet. Many described that approach as stifling innovation with added regulatory hurdles. Wyoming Senator Cynthia Lummis termed the rule “catastrophic,” blaming it for choking the evolution of digital assets inside the United States’ geographical confinities. Circle CEO Jeremy Allaire also blasted this bulletin, hailing it “punitive” to financial institutions and corporations holding crypto assets.
Introduced under the leadership of former SEC Chairman Gary Gensler, SAB 121 drew sharp criticism from them Commissioner Hester Peirce, who called it a “pernicious weed” in April 2024. Peirce reasoned that a regulation with such wide-reaching ramifications should be decided by the Commission as a whole, and not staff only reporting to the Chairman.
SEC Announces SAB 122
On January 23, 2025, the SEC replaced SAB 121 with SAB 122, rescinding the prior guidance. The new bulletin removes the requirement to record crypto holdings as liabilities, instead deferring to broader accounting standards for assessing safeguarding risks. Them made it clear that entities must apply these changes retrospectively for annual periods beginning after December 15, 2024.
SEC Secretary Vanessa A. Countryman announced the repeal as a significant policy shift. Commissioner Hester Peirce chimed in on the action on X: “Bye, bye SAB 121! It’s not been fun.”
Political and Industry Reactions
Efforts to overturn SAB 121 began in 2024 when lawmakers voted to rescind it. However, then-President Joe Biden vetoed the resolution, defending the rule as a reflection of the SEC staff’s “considered technical” judgment. Critics like Senator Lummis said the decision stunted innovation, while Allaire predicted its eventual repeal as necessary for progress.
A Turning Point for Crypto Regulation
The repeal of SAB 121 marks a sea change in how the SEC approaches cryptocurrency oversight. Hester Peirce, long an advocate for collaborative rule-making, said transparent, commission-led decisions are important.
With SAB 121 now gone, the crypto industry expects fewer regulatory hurdles that may open the door to wider use of digital assets among financial institutions. The change marks momentum building toward balanced crypto regulations in the United States.
