SEC Lifts Ban on Banks Holding Cryptocurrencies

The U.S. Securities and Exchange Commission (SEC) has repealed SAB 121. The document effectively prohibited banks from holding digital assets.

Bye, bye SAB 121! It’s not been fun: https://t.co/cIwUc0isUE | Staff Accounting Bulletin No. 122

— Hester Peirce (@HesterPeirce) January 23, 2025

“Bye-bye SAB 121! It’s not been fun,” commented Commissioner Hester Peirce.

The decision marks the first significant initiative by the official following her appointment as head of the regulator’s digital assets task force.

The SEC issued SAB 121 in April 2022. The rule required institutions to account for clients’ cryptocurrencies as liabilities on their balance sheets.

In February 2024, four industry organizations appealed to the agency to ease the document’s provisions. Peirce described the Bulletin and related management oral guidance as “a pernicious weed.”

In May, the Senate supported a resolution to annul SAB 121. Subsequently, the lower house of the U.S. Congress passed a bill. In July, the House of Representatives failed to gather the necessary two-thirds majority to override the presidential veto on this law.

The new Staff Accounting Bulletin issued on January 23 “rescinded the interpretive guidance” of SAB 121.

Chairman of the U.S. House Financial Services Committee French Hill expressed “satisfaction.”

?Chairman @RepFrenchHill: “Finally, the Biden-Harris misguided SAB 121 rule has been rescinded. Holding reserves against the assets held in custody is NOT standard financial services practice and am pleased this rule was nullified. I applaud @SECGov for taking strong steps… pic.twitter.com/PFz4PKeT2t

— Financial Services GOP (@FinancialCmte) January 23, 2025

“Creating reserves for assets in custody is not standard practice,” emphasized the lawmaker.

In a similar vein, the head of the Senate Subcommittee on Digital Assets Cynthia Lummis commented.

SAB 121 was disastrous for the banking industry, and only stunted American innovation and advancement of digital assets. I am THRILLED to see it repealed and get the SEC back on track to fulfilling its intended mission. https://t.co/KkWQmNDJ8I

— Senator Cynthia Lummis (@SenLummis) January 24, 2025

“SAB 121 was disastrous for the banking industry and only stunted American innovation and the development of cryptocurrencies,” she explained.

On January 23, U.S. President Donald Trump mandated the creation of a task force on digital asset markets.

Within 180 days, the body is expected to develop recommendations for regulatory changes and assess the “potential for creating and maintaining a national cryptocurrency reserve.”