SEC Rescinds SAB 121, Removing Accounting Impediment for Banks to Custody Bitcoin

The Bitcoin community has responded favorably to the SEC's decision. Andrew Parish, founder of x3, emphasized the significance of SAB 122

The US Securities and Exchange Commission (SEC) announced on Thursday, January 23, the rescission of Staff Accounting Bulletin (SAB) No. 121, a directive that had imposed stringent accounting requirements on crypto custody for US banks and financial institutions. The move, encapsulated in the newly issued SAB 122, is poised to serve as a more substantial catalyst for Bitcoin’s price dynamics than the anticipated US Bitcoin Reserve (SBR), according to several industry experts.

Several experts in the cryptocurrency industry have highlighted the potential implications of the SEC's decision to rescind SAB 121 and issue SAB 122, particularly in the context of Bitcoin's price dynamics and institutional participation in the crypto market. Here's a summary of their insights:

Andrew Parish, the founder of x3, points to the significance of SAB 122 on X, stating, “Rescinding of SAB 121 is a bigger catalyst for Bitcoin than the SBR. Bookmark this post.” This suggests that the rescission of SAB 121, which eases accounting rules for banks' crypto custody, could have a greater impact on Bitcoin's price than the proposed US Bitcoin Reserve, which aims to allocate a portion of the US government's reserves to Bitcoin.

Highlighting the broader market implications, Fred Krueger, the founder of Troop, notes, “SAB 122 is extremely good for Bitcoin. More significant than the Bitcoin Reserve, which is also coming. Now watch the Banks start accumulating.” This statement suggests that the SEC's decision to ease accounting rules for banks' crypto custody, as outlined in SAB 122, could have a positive effect on Bitcoin's market performance and lead to increased institutional participation, particularly from banks accumulating BTC.

Vijay Boyapati, an Ex-Google engineer and the author of The Bullish Case for Bitcoin, further elaborates on the transformative potential of the SEC's action, stating, “It really is hard to emphasize how huge a sea change we’re witnessing. We went from the worst conceivable anti-Bitcoin, anti-innovation, anti-growth, anti-business administration to the most friendly Bitcoin administration you could hope for. This is 100% not priced in.” This commentary highlights the dramatic shift in the SEC's stance towards Bitcoin and cryptocurrencies over the past few years, which could have significant implications for the broader institutional adoption of digital assets.

Michael Saylor, Executive Chairman of MicroStrategy, succinctly captured the market sentiment with his tweet: “SAB 121 has been rescinded, allowing banks to custody Bitcoin. 🚀” This statement aligns with Saylor's previously outlined tgree catalysts for Bitcoin reaching $1 million per coin, where the facilitation of traditional bank custody stood as last open m factor. Saylor's commentary suggests that the rescission of SAB 121, which had prohibited banks from offering crypto custody services, could pave the way for a new wave of institutional demand for Bitcoin.

The regulatory easing is expected to catalyze increased institutional participation in the BTC and crypto market. Brian Moynihan, CEO of Bank of America—the second-largest US bank by assets—addressed the potential for broader crypto adoption during an interview with CNBC's Andrew Ross Sorkin at the World Economic Forum in Davos, Switzerland. Moynihan stated, “If the rules come in and make it a real thing that you can actually do business with, you’ll find that the banking system will come in hard on the transactional side of it.”

This statement aligns with the SEC's latest directive, indicating that banks are now more likely to develop and offer crypto services, including custody solutions, which were previously constrained under SAB 121. The removal of these regulatory hurdles is anticipated to enhance the liquidity and accessibility of Bitcoin, potentially driving a new wave of demand similar to the spot ETFs in January last year.

At press time, BTC traded at $105,466.