In a recent speech, Paul Munter, the Chief Accountant of the U.S. Securities and Exchange Commission (SEC), appeared to back down slightly on the SEC’s Staff Accounting Bulletin No. 121 (SAB-121), a measure that restricted banks from providing digital asset custody services for clients. According to an analysis by Alex Thorn, Head of Research at Galaxy, Munter proposed some exemptions allowing bank holding companies and introducing brokers to circumvent the custody provisions of SAB-121.

Banks could avoid the reporting requirements of SAB-121 if they obtain written permission from state regulators to custody customer assets in a “bankruptcy-segregated” manner, explicitly define standards in their contracts, and conduct regular risk assessments.

Introducing brokers can also exempt themselves from the requirements of SAB-121 by meeting three conditions:

• They cannot hold the private keys of their clients.
• They cannot act as a third party in transactions.
• They cannot be an agent of the introducing broker.

Finally, introducing brokers must obtain a legal opinion confirming their status as an introducing broker that meets the digital asset exemption criteria.

Previously, on July 11th, the U.S. House of Representatives voted on whether to overturn President Joe Biden’s veto of a resolution related to SAB 121, but the vote failed. The SEC’s cryptocurrency accounting policy remains unchanged.