An SEC insider reveals the reason for the regulator making exceptions in the SAB 121.
The SAB 121 bill was passed in March 2022 to ensure listing of crypto assets by banks.
The history of crypto’s battle with the SEC dates back several years. Amid the recent anti-SAB voting, the SEC has announced making exceptions for certain custody banks and broker dealers in crypto reports. This announcement has caused quite a stir, raising speculations in the market. Recently, Fox Reporter Eleanor Terrett stated, speaking to an insider regarding the exception.
Notably, according to Eleanor Terrett’s post on her X account, the SEC remains firm on its SAB (Staff Accounting Bulletin) 121 guidance but has made exceptions for particular reasons. Moreover, the reporter’s inside source stated that firms have demonstrated to the SEC that their fact patterns are different from those outlined in the SAB 121.
The insider stated that:
“certain broker dealers and custody banks have sufficiently demonstrated to SEC staff that their fact patterns are different from those described in SAB 121…such as ensuring that customers maintain ownership of their assets even in the case of a resolution or bankruptcy.”
The SAB 121, passed in March 2022, states that banks and institutions must list digital assets in their balance sheets. It also views digital assets including crypto assets as liabilities. Due to its restrictive nature, the US House and Senate, as aforementioned, attempted to discard the bill by voting for an anti-SAB 121.
What is the SEC’s Present Stance on SAB 121?
As aforementioned, the market witnessed an update that the SEC has allowed certain custody banks and broker dealers to exclude the SAB 121 format. This announcement sparked a debate, some members felt it was a positive outcome for crypto regulations. Meanwhile, others felt that the SEC’s secrecy and exception were unjust.
Relatedly, Eleanor Terrett stated that the SAB 121 is not a ‘rule’ and an ‘accounting staff guidance’. This has caused the SEC to not be involved in all the discussions the staff has had with particular organizations. The regulator is currently looking into the issue stated the Fox reporter.
Finally, amid several lawsuits, the US regulator, recently ended its investigation into the Blockchain developer, Hiro Systems. Overall, the SEC’s contradicting actions have led to regulatory uncertainty within the US crypto sector.
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