(Bloomberg) — US Securities and Exchange Commission staff repealed accounting guidance the crypto industry has said squashed its ability to work with banks.
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“The staff reminds entities that they should continue to consider existing requirements to provide disclosures that allow investors to understand an entity’s obligation to safeguard crypto assets held for others,” according to the repeal notice issued Thursday.
Released in 2022, Staff Accounting Bulletin No. 121 called on businesses to account for customers’ crypto assets as their own by listing them on their balance sheets.
It was billed as a way to let investors learn about the unique risks of crypto, especially if it was misused or stolen, and swelled the balance sheets of companies including Coinbase Global Inc. and Robinhood Markets Inc.
The guidance also had the effect of limiting banks from offering crypto custody services to customers because crypto-boosted balance sheets would trigger onerous capital reserve requirements set by federal banking agencies.
In 2024, Congress took the unusual step of voting to rescind the bulletin but failed to override a veto from then-President Joe Biden.
The crypto industry has long targeted the agency’s accounting bulletin even though SEC staff in some circumstances has allowed banks to bypass the reporting requirements.
“Bye, bye SAB 121!” SEC Commissioner Hester Peirce, who was tapped on Tuesday to lead an SEC task force to come up with ways to regulate crypto, posted on X. “It’s not been fun.”
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