SEC accounting staff rescinds SAB 121 through Staff Accounting Bulletin 122

What changed

SEC accounting staff rescinded SAB 121’s staff view that an entity safeguarding customer crypto assets should recognize a safeguarding liability and corresponding asset. The rescission does not eliminate generally applicable accounting, loss-contingency, or risk-disclosure requirements.

Who it affects

• Public companies and financial institutions safeguarding crypto assets
• Advisers assessing the financial condition and operational resilience of crypto custodians

What is still open

• How individual custodians will revise financial statements and controls
• Whether custody capacity and pricing will change in response

What it means for an advisor

• Refresh custodian financial-condition diligence using post-rescission statements
• Do not describe the bulletin as an SEC custody exemption or qualified-custodian determination

Previous interpretation

SAB 121 stated that safeguarding entities should recognize a liability and corresponding asset for customer crypto assets held.