What was SAB 121? The Staff Accounting Bulletin (SAB) 121 rule was introduced by the SEC in March 2022 as part of its efforts to regulate cryptocurrency custody. It required financial institutions to list any crypto assets they held on behalf of customers as liabilities on their balance sheets.

SEC revises crypto custody accounting policy with SAB 122, offering banks flexibility in reporting liabilities for safeguarding assets.

The SEC revoked the controversial SAB 121 rule, which prevented banks and financial institutions from custodying crypto. The regulator introduced a new bulletin known as SAB 122, which allows financial institutions to manage clients’ crypto holdings. SAB 122 adds to the list of reforms being introduced by President Donald Trump's administration.

The SEC has replaced its strict crypto custody accounting rule SAB 121 with more flexible guidance under SAB 122, allowing banks to use standard accounting principles for digital assets and potentially expanding their ability to offer crypto custody services.

Efforts to overturn SAB 121 gained bipartisan support in Congress last year, although a veto from then-President Joe Biden left the measure intact, further hindering banks from expanding their crypto offerings.