The SEC rescinded its cryptocurrency accounting guidance, Staff Accounting Bulletin (SAB) 121, on Jan. 23, 2025. Issued in March 2022, SAB 121 required crypto custodians to record digital assets held for customers as liabilities on their balance sheets. Some industry participants and lawmakers expressed concerns that the guidance could impact regulated entities’ willingness to offer crypto custody services. In May 2024, former President Biden vetoed a bipartisan bill that would have rescinded SAB 121.

SAB 122, which formally rescinds SAB 121, directs custodians to assess potential liabilities of digital assets held, rather than requiring liabilities to be recorded for those assets. As part of the assessment, custodians must determine whether to recognize a liability related to the risk of loss under their custody arrangements. When recognizing and measuring the liability, custodians must follow the standard accounting rules of the Financial Accounting Standards Board Accounting Standards Codifications under U.S. Generally Accepted Accounting Principles or International Accounting Standards under International Financial Reporting Standards. This change may encourage banks to offer digital asset custody services, which might lead to more banks and financial institutions entering the crypto custody market.

The decision to rescind SAB 121 follows the recent appointment of acting SEC Chairman Mark Uyeda and aligns with a recent executive order from President Trump that established a working group to develop a federal framework for digital assets. The move is also consistent with the SEC’s decision, under Uyeda’s leadership, to form a crypto task force led by SEC Commissioner Hester Peirce to craft clear and practical regulatory frameworks for the industry. These developments mark a significant shift from the previous administration’s approach to crypto regulation.

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Photo of Barbara A. Jones Barbara A. Jones

Barbara A. Jones is Co-Managing Shareholder of the firm’s Los Angeles office and a member of the firm’s Global Corporate practice. Barbara serves as Chair of the firm’s interdisciplinary Blockchain & Digital Assets practice. Barbara maintains a diverse corporate and securities law practice

Barbara A. Jones is Co-Managing Shareholder of the firm’s Los Angeles office and a member of the firm’s Global Corporate practice. Barbara serves as Chair of the firm’s interdisciplinary Blockchain & Digital Assets practice. Barbara maintains a diverse corporate and securities law practice across industry groups, emphasizing complex international and domestic transactions, including private and public financings, dual listings, mergers and acquisitions, strategic collaborations and joint ventures, and licensing transactions. She serves as a trusted advisor to public and private company boards of directors on governance matters and complex regulatory reporting and compliance issues. Barbara’s clients include financial institutions, private equity and venture capital groups, and public and private companies in emerging technology, life sciences and biotechnology, defense and security, blockchain and digital assets, telecommunications, information technology, energy (traditional and renewable), mining, media, entertainment and sports. Barbara also represents Olympic and professional athletes and sports-related organizations.

Barbara practiced U.S. law in London from 1990 through 1997 with Sullivan & Cromwell, LLP, and headed the international capital markets practice of Kirkland & Ellis LLP from 1999 to 2003 before relocating to Boston. From 1997 to 1999, she served as Vice-President, Assistant General Counsel and Regional Counsel for capital markets with J.P. Morgan Securities Ltd. in Europe, the Middle East and Africa. Since returning to the U.S., she has continued to actively represent public and private companies, private equity groups and investment banks in the European, Scandinavian, African and greater Asian markets, including China.

Barbara is a past chair of the ABA’s Subcommittee on International Securities Matters. She is a frequent speaker at conferences relating to cross-border securities matters, strategic alternatives, and digital asset structures. She serves on the Government of Bermuda’s Global FinTech Advisory Board.

Photo of Kyle Jaep Kyle Jaep

Kyle Jaep is a member of the Corporate Practice in Greenberg Traurig’s Los Angeles office. Kyle focuses his practice on capital markets, securities reporting, venture capital financing, and general corporate governance matters. He is a member of the firm’s interdisciplinary Blockchain & Digital…

Kyle Jaep is a member of the Corporate Practice in Greenberg Traurig’s Los Angeles office. Kyle focuses his practice on capital markets, securities reporting, venture capital financing, and general corporate governance matters. He is a member of the firm’s interdisciplinary Blockchain & Digital Assets Group.