Crypto Gets a Win! SEC Ditches Controversial SAB 121 Rule

“Bye-bye, SAB 121! It’s not been fun,” tweeted SEC Commissioner Hester Pierce, celebrating the U.S. regulator’s decision to withdraw the controversial 2022 accounting guidance. This rule required companies to report customers’ crypto assets on their balance sheets, a move that many in the cryptocurrency industry found burdensome.

For the crypto community, this change is a breath of fresh air, with many expressing their excitement on social media. But why did this rule spark so much controversy?

What Was SAB 121 and Why Was It a Problem?

SAB 121, introduced in 2022, was designed to address risks related to customers’ crypto assets. It required companies to list customer crypto holdings on their balance sheets, helping investors understand potential risks like theft or misuse.

While the rule aimed to increase transparency, it created several issues. It led to inflated balance sheets, making it harder for companies to assess their financial health. Banks, facing stricter capital reserve requirements due to the larger balance sheets, found it more difficult to offer crypto custody services.

Crypto companies like Coinbase and Robinhood also struggled with the operational challenges caused by these expanded balance sheets.

In 2024, U.S. Congress tried to overturn SAB 121, with lawmakers voting to cancel the rule. However, Former President Joe Biden Joe Biden   Joe Biden Jr. is a former senator and the 46th Democratic President of America. He is hailed as one of the finest leaders of America, especially by the Democratic Party. At the outset, Biden and his administration stressed protecting consumers and providing regulatory transparency.    In March 2022, he enacted Executive Orders that further launched investigations into Central Bank Digital Currencies (CBDCs) and the oversight of cryptocurrency markets. For crypto adoption in the country, he insists on the need for clear and easy-to-function crypto regulations.   Quick Facts   Full name Joseph Robinette Biden Jr. Birth 20-11-1942, Scranton, Pennsylvania, United States Nationality American Education BA from the University of Delaware Known for Political leadership   Joe Biden - Career Highlights & Events   1970 - Elected to the New Castle County Council   2017 – Published memoir Promise Me, Dad, reflecting on personal and political life   2020 – Elected as the 46th President of the United States    2022 – Directed federal agencies to create frameworks for cryptocurrency regulations.   President vetoed this decision, keeping the rule in place for a time.

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Hester Peirce Praises the SEC’s Decision

Following the SEC’s decision to repeal the rule, Hester Peirce – recently appointed to lead a crypto task force aimed at creating a clear and balanced regulatory framework – expressed her approval. She believes the repeal of SAB 121 is a positive step for the industry.

Better Regulations, More Growth

The repeal of SAB 121 is a significant move for the cryptocurrency sector. By reducing regulatory burdens on companies and banks, the SEC has created a clearer path for growth and smoother operations.

With Peirce leading the charge toward more practical and transparent regulations, the industry is on track for a stronger, more balanced future.