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The U.S. Securities and Exchange Commission (SEC) has officially repealed the contentious Staff Accounting Bulletin (SAB) No. 121, which previously hindered banks from providing custody services for Bitcoin 
$103,858 and other cryptocurrencies. This decision signifies a notable shift in the SEC’s regulatory approach to Bitcoin and cryptocurrencies, paving the way for increased financial integration.
Changes in Regulation
Introduced in March 2022 during former SEC Chairman Gary Gensler’s tenure, SAB 121 mandated that institutions record customer-held Bitcoin and crypto assets as liabilities on their balance sheets. This accounting standard created significant operational and financial burdens for banks and custodians, effectively preventing them from offering services related to Bitcoin.
The rule faced widespread criticism from the crypto industry and lawmakers. SEC Commissioner Hester Peirce described it as “a harmful weed” in April 2023.
“After the repeal of SAB 121, Hester Peirce posted on X platform: ‘Goodbye SAB 121! It was never fun.’”
New Leadership and Future Plans
The SEC’s repeal of SAB 121 occurred just days after Gensler’s resignation, signaling the start of a new era under a Republican administration. Acting SEC Chairman Mark Uyeda, who took office on Monday, quickly announced the formation of a crypto task force led by Peirce. This task force aims to create clearer and more implementable regulatory frameworks for the industry.
In a statement on Tuesday, the SEC remarked, “Thus far, the SEC has primarily relied on sanctions to regulate cryptocurrencies reactively and retrospectively, adopting new and unprecedented legal interpretations in the process.”
With the repeal of SAB 121, major banks are expected to integrate Bitcoin and crypto custody services into their portfolios. This is viewed as a significant step towards broader acceptance of Bitcoin in the financial sector.
The integration of cryptocurrencies into the banking sector may support their acceptance among wider audiences and aid in gaining a more substantial foothold in financial markets.
These developments are seen as a pivotal milestone for making cryptocurrencies more transparent and accessible within the regulatory landscape.
As financial institutions become more willing to engage with crypto assets, new opportunities for investors are anticipated.
Ultimately, these changes are expected to positively impact the future of cryptocurrency markets, contributing to a more sustainable structure for the industry.
