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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 strict 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 price dynamics than the expected US Bitcoin Reserve (SBR), according to several industry experts.
Implications for Bitcoin
Originally enacted in 2022, SAB 121 required banks to classify customer-treated cryptocurrencies as liabilities on their balance sheets. This classification significantly increased operational costs and complexities for financial institutions, effectively deterring them from offering crypto-related services. The requirement thus acted as a barrier, limiting the integration of Bitcoin and other cryptocurrencies to regular banking activities.
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The withdrawal of SAB 121 through SAB 122 effectively removes this accounting barrier. SEC Commissioner Hester Peirce praised the decision on social media, stating: “Bye, Bye Sab 121! It hasn’t been fun: http://sec.gov | Personnel Expenditure Bulletin No. 122.”
The Bitcoin community has reacted favorably to the SEC’s decision. Andrew Parish, founder of X3, highlighted the significance of SAB 122 on statement“Repeal of SAB 121 is a bigger catalyst for Bitcoin than the SBR. Bookmark this post. Likewise, Fred Krueger, founder of Troop, marked The broader market implications and notes: “SAB 122 is extremely good for Bitcoin. More important than the Bitcoin reserve, which is also coming. Now watch the banks start to accumulate. “
Vijay Boyapati, an ex-Google engineer and the author of the bullish case for Bitcoin, continues elaborated On the transformative potential of the SEC’s action, stating: “It is truly difficult to emphasize how massive a sea change we are witnessing. We went from the worst anti-bitcoin, anti-innovation, anti-growth, anti-business administration imaginable to the friendliest bitcoin administration you could hope for. This is 100% unpriced. ”
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Michael Saylor, executive chairman of MicroStrategy, captured the market sentiment succinctly with his tweet: “SAB 121 has been repealed, allowing banks to use bitcoin. 🚀 “This is consistent with Saylor’s previously outlined Tgree catalysts for Bitcoin reaching $1 million per coin, where the facilitation of traditional bank custody was the last open M factor.
The regulatory relaxation is expected to catalyze increased institutional participation in the BTC and Crypto market. Brian Moynihan, CEO of Bank of America—the second-largest U.S. 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, “As the regulations come in and really make it something that you can actually do business with, you’re going to find that the banking system is going to come in hard on the transactional side.”
This statement aligns with the SEC’s latest guidance, which indicates that banks are now more likely to develop and offer crypto services, including custody solutions, that were previously restricted under SAB 121. The removal of these regulatory hurdles is expected 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 was trading at $105,466.
Featured image created with Dall.e, chart from TradingView.com
