A New Chapter for The US Crypto Regulation: What Lies Ahead?
“Bye, bye SAB 121! It’s not fun.” SEC Commissioner Hester Pierce on Published an article.
The cryptocurrency industry wholeheartedly welcomes this move. Many cryptocurrency enthusiasts openly expressed their joy on social media. Some believe this is a critical point for the cryptocurrency industry to succeed. It’s time to dig deeper. Ready?
What is SAB 121 and why is it controversial?
SAB 121 launches in 2022. Designed to address risks associated with clients’ crypto assets. It allows investors to stay informed of potential risks such as the theft or misuse of crypto assets, as it requires companies to list customer holdings of cryptocurrencies on their balance sheets. However, it resulted in a bloated balance sheet and significant operational challenges for the company.
How does the rule affect banks and cryptocurrency companies?
Banks face strict capital reserve requirements as their balance sheets grow. Of course, it limits banks’ ability to provide cryptocurrency custody services. At the same time, expanding balance sheets have created serious operational challenges for cryptocurrency companies such as Coinbase and Robinhood.
In 2024, the U.S. Congress made a strong attempt to cancel the SAB 121 rule. Legislative Time members voted against the rule, calling for its revocation. However, then-President Joe Biden used his veto power to overturn the legislative body’s decision.
What does the SEC Commissioner think about the SEC’s rejection of SAB 121?
Hester Peirce, who was recently appointed to lead a cryptocurrency working group aimed at creating a clear regulatory framework for cryptocurrencies in the United States, expressed joy at the SEC’s decision to repeal the controversial SAB 121 guideline.
All in all, the repeal of SAB 121 marks an important step forward for the cryptocurrency industry. By easing the regulatory burden on companies and banks, the SEC has paved the way for better industry development. With Hester Peierce leading the way for clearer cryptocurrency regulations, the industry looks set to thrive under a more balanced and practical regulatory framework.
