SEC Commissioner Hester Peirce Says Goodbye to Controversial Crypto Accounting Guidance SAB 121

The US Securities and Exchange Commission (SEC) has revoked the controversial Staff Accounting Bulletin – SAB 121, days after Gensler’s resignation.

The rule gained widespread criticism for asking banks that hold crypto to record them as liabilities in their balance sheets.

The new SAB on Jan. 23 noted that it “rescinds the interpretive guidance” of the SAB 121 rule. The Commission made it clear that entities should now determine any liabilities related to safeguarding risks under broader accounting standards.

“Entities should implement this change retroactively for annual periods starting after December 15, 2024,” the SEC said in its bulletin.

Vanessa A. Countryman, Secretary of the SEC, confirmed that SAB 122 has officially replaced SAB 121 in the regulatory framework.

“Bye, bye SAB 121! It’s not been fun: SEC,” Hester Peirce, a commissioner at the US SEC, wrote on X.

Peirce previously called the SAB 121 a “pernicious weed,” criticizing Gensler’s approach to regulating the industry. In an April 2024 event, she stressed that rules of such broad effect “should be set by the whole Commission” and not by the staff that reports only to the chairman.

Wyoming Senator Cynthia Lummis called the SAB 121 “disastrous for the banking industry.” The Bulletin “only stunted American innovation and advancement of digital assets,” she wrote on X.

“I am Thrilled to see it repealed and get the SEC back on track to fulfilling its intended mission.”

Then President Joe Biden Vetoed Lawmakers Vote to Rescind SAB 121

On May 16, 2024, the US Senate voted to overturn the accounting bulletin. However, former President Joe Biden vetoed the resolution a few weeks later, defending SAB 121 as a reflection of the “considered technical” judgment of SEC staff.

Recently, Circle CEO Jeremy Allaire criticised the SAB 121, adding that the rule made it “punitive for banks and financial institutions and corporations even to hold crypto assets on their balance sheet”.

He predicted that the crypto executive order would closely watch to rescind the crypto accounting guidance. “I’m strongly in favour of repealing it and I would hope that President Trump would take that action,” Allaire said during the Davos World Economic Forum.

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