The US Security and Exchange Commission's (SEC) accounting bulletin 121 (SAB 121) has been a hurdle for banks to offer crypto custody services. However, the SEC is now offering a path for banks and brokerages to avoid reporting their customers' crypto holdings on their balance sheets, a departure from the previous strict enforcement of SAB 121. This move could allow more banks and companies to offer crypto custody services, expanding options for American crypto holders.

Despite this, SAB 121 remains in place following the failed attempt to override President Biden's veto in the House. The SEC believes that the original guidance has achieved its purpose, prompting companies to address security and legal risks associated with crypto holdings. The optimistic market response suggests that this new, more flexible stance could be a significant step forward for the DeFi and BRC 20 sectors.