SEC Appears to Back Down on Crypto Accounting Policy SAB 121

According to Cointelegraph, the US Securities and Exchange Commission (SEC) seems to be backing down on its proposed accounting policy SAB 121 for crypto.

Galaxy research director analysis suggests that SEC Chief Accountant Paul Munter has proposed some exemptions for bank holding companies and introducing brokers to avoid the custodial provisions of SAB-121.

Banks can avoid the reporting requirements of SAB-121 if they:

• Obtain written permission from state regulators to hold customer assets in a bankruptcy-isolated manner.
• Clearly define standards in contracts.
• Regularly conduct risk assessments.

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

• The broker cannot hold customer private keys.
• They cannot act as a third party or agent for the introducing broker in transactions.
• The broker must obtain a legal opinion confirming that they are eligible for the digital asset exemption as an introducing broker.