Yesterday the U.S. Securities and Exchange Commission (SEC) rescinded SAB 121. The staff accounting bulletin required companies to put digital assets under custody as an asset and a liability on their balance sheet, a highly unorthodox treatment.
Given assets under custody belong to clients, they do not belong on the balance sheet. Prudential regulations relating to bank balance sheets meant the guidance blocked banks from providing custody for either cryptocurrency or digital securities. In the last few months the SEC allowed some exceptions on a case-by-case basis.
A lot of time was burned on the topic, as the Government Accountability Office (GAO) determined that SAB 121 warranted a Congressional review. The House and Senate voted to rescind it, but President Biden used a Presidential veto.
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