On January 23, the US Securities and Exchange Commission (SEC) announced that it had withdrawn its controversial accounting guidance, Staff Accounting Bulletin 121 (SAB 121). The move has been lauded by several industry leaders and pro-crypto politicians, who criticized the Biden administration’s “stringent” regulatory approach to digital currencies. The SEC detailed the change in a notice published on its official website, introducing Staff Accounting Bulletin No. 122 to replace the prior guidance. “ SAB 122 rescinds the interpretive guidance included in Topic 5.FF in the Staff Accounting Bulletin Series entitled Accounting for Obligations to Safeguard Crypto-Assets an Entity Holds for its Platform Users ,” the agency denoted. This is clearly a new dawn for crypto regulation in America. The last four years have seen the Biden-Harris administration push industries offshore. Now, that is gone. The 47th POTUS, Donald Trump has sworn America will be the leading crypto hub. There have been genuine questions about whether digital assets can become entrenched into the world’s largest economy. Here was his promise during the July 2024 Bitcoin Conference in Nashville, Tennessee – “Don’t sell any of your Bitcoin…If I am elected, it will be the policy of my administration, United States of America, to keep 100% of all the Bitcoin the U.S. government currently holds or acquires into the future. ” Now, he is president. SAB 121 is a relic of a dark past for crypto The truth is that policies passed in the US somehow trickle down to the rest of the world. When SAB 121 was introduced, the rest of the world noticed. The bill required companies holding crypto on behalf of customers, like banks and crypto platforms, to include those assets on their balance sheets. What excuse did the SEC give? Former chair Gary Gensler said it was addressing the risks of digital currencies association, theft, misuse, or losses from market volatility. That did not sit well with industry participants. Critics, including crypto KOLs, exchanges, and financial institutions, argued that the rule created inflated balance sheets that did not accurately reflect the companies’ financial health. Crypto firms such as Coinbase and Robinhood also faced operational problems under SAB 121. “ The US nation’s largest banks are subject to the highest level of prudential requirements. Unfortunately, significant capital requirements contained in the SEC’s SAB 121 have effectively precluded banks today from being able to offer digital asset custody services, ” said Kevin Former, the CEO of non-partisan organization the Financial Services Forum, in February 2024. In May 2024, both the House and Senate voted to rescind the rule. But on June 1, after a lot of political summons and arguments forwarded by the SEC and Gary Gensler, then-President Joe Biden vetoed the repeal. Senator Lummis took to social media to fault the former president, saying he chose to not “listen to the will of the American people.” I will not stand idly by as this admin attempts to skirt the law, and I will continue to fight to promote financial innovation and key protections for crypto assets this admin seems hellbent on stifling. My statement on the president's decision to veto my SAB 121 CRA⬇️ pic.twitter.com/pXjGXPi6fN — Senator Cynthia Lummis (@SenLummis) June 1, 2024 What Biden could not do, Trump has done – and better, Barely two days after Gensler resigned from the SEC on January 20, 2025, interim chair Mark Uyeda, supported by President Donald Trump, rescinded the law. Now, this is just a bad economic history. The American Bankers Association, led by President and CEO Rob Nichols, also gave the following statement: “ We applaud the SEC’s decision to rescind its Staff Accounting Bulletin 121, which made it harder for banks to provide consumers with safe and sound digital asset services. Allowing banks to serve as custodians for digital assets ensures that consumers won’t be left only with unsupervised, poorly regulated options to safeguard these assets going forward .” Meet the new crypto era under POTUS Trump – SAB 122 The old wine skins are gone and the new wine has new skins. There is another bill SAB 122. It reflects a more pragmatic approach to accounting for crypto assets. According to the SEC’s press release , it eliminates the burdensome requirements of its predecessor but retains certain safeguards to ensure transparency and investor protection. SAB 122 eliminates one section from the previous guidance, namely TOPIC 5: MISCELLANEOUS ACCOUNTING, which harbored obligatory requirements for companies that held crypto assets for its clients. The standard practice for traditional investment assets dictates that it is clients who own the investments, so they are typically excluded from a custodian’s balance sheet. However, under SAB 121, companies holding customer’s crypto-assets were required to report them as a liability on their balance sheet. What does this mean for investors? Per the plan, the SEC has treated any risks, losses, or gains, in whatever scenario the incidents took place, as the responsibility of the trading platform, not its clientele. Its replacement has fully rescinded that law, and banks can now offer custody services to their users without worrying about paying any losses or gains derived from the market’s volatility. Does that sound like the promise Donald Trump made? Well, it’s close enough. Just like decentralized exchanges, banks are now only required to explain the risks of holding digital currencies. Beyond that, it’s all in the investors’ hands. The plan falls just a little shy of Satoshi Nakamoto’s full intent when rolling out crypto after the 2007-2008 economic collapse. How Trump’s administration will support crypto adoption This is what the crypto community has to work with under the new regulations. SAB 121 focused more on companies disclosing liabilities and “how many” crypto assets, which greatly discouraged financial institutions. Now, with the new plan , SAB 122 has left the field open for them to focus more on talking to their crypto clients and not to the regulators, as it was before. This new plan opens up a path for the crypto exchanges that moved overseas to return home. It gets better. On January 23, Trump signed an executive order to create a “task force” that will discuss the potential creation of a digital currency strategic stockpile. The EU took a similar step with its MiCA – one of the most comprehensive regulations the 16-year-old industry has seen. The US government will keep all the Bitcoins in its custody. Just hours before President Trump signed the order on Wednesday, Senator Cynthia Lummis (R-Wyoming), a well-known Bitcoin advocate, was appointed chair of the Senate Banking Subcommittee on Digital Assets. The crypto regulation clarity train in out of the woods. Lummis stands her ground that a federal Bitcoin reserve would “strengthen the US dollar” and solidify the United States’ position as a global financial leader and innovator in the evolving digital economy. “ I am humbled my colleagues have placed their trust in me to chair this historic subcommittee and I look forward to shepherding bipartisan legislation to President Trump’s desk this year that secures our financial future ,” said Lummis. The future of crypto regulation looks clearer The Lummis-led Senate Banking Subcommittee on Digital Assets for the 119th Congress has outlined two points of focus. Number one, it will develop bipartisan legislation that encourages responsible innovation while protecting crypto investors. The plan includes addressing areas such as market structure, stablecoins, and the establishment of a strategic Bitcoin reserve. Number two, the committee is committed to preventing regulatory overreach, such as actions resembling “ Operation Chokepoint 2.0 .” Trump’s efforts in his first week of Presidency have evidently undone a lot of the damage from the former US administration. Even though we’re only a few days into 2025, and the president can be a bit of a maverick, it does feel like he is committed to making America the world’s crypto capital. Come December 2025, the US’s digital currency laws might be even clearer. Senator Lummis is leading a Republican-dominant Senate. The SEC is having a change of heart under new leadership. What could go wrong? It seems all directions are pointing towards the crypto community “winning.” Cryptopolitan Academy: FREE Web3 Resume Cheat Sheet - a href="https://www.cryptopolitan.com/ultimate-web3-resume-cheatsheet?utm_source=cryptopolitan&utm_medium=banner&utm_campaign=web3cs-1" target="_blank">Download Now
