- The SEC has provided guidance allowing banks to bypass SAB 121 crypto custody rules.
- Banks can now offer crypto asset custody by meeting specific regulatory conditions.
- This move opens doors for institutional crypto custody but raises fairness concerns for crypto-native firms like Coinbase.
The U.S. Securities and Exchange Commission (SEC) has provided new guidance that could allow banks to offer crypto asset custody services without adhering to strict accounting requirements under Staff Accounting Bulletin No. 121 (SAB 121).
SEC Chief Accountant Paul Munter announced the new guidelines in a speech on September 9, paving the way for banks to enter the digital asset market.
Background on SAB 121
SAB 121, introduced by the SEC in 2022, requires public companies to account for digital assets held for clients on their balance sheets. The regulation poses risks for banks, as it could classify their customers as unsecured creditors if a custodian goes bankrupt.
This rule has prevented many banks from providing crypto custody services due to additional capital requirements and regulatory hurdles.
Legislative Actions Challenge SAB 121
In May 2024, th…
The post SEC Loosens SAB 121 Rules, Paving the Way for Banks to Enter Crypto Custody Market appeared first on Coin Edition.
Source: https://coinedition.com/sec-loosens-sab-121-rules-paving-the-way-for-banks-to-enter-crypto-custody-market/