The Securities and Exchange Commission (SEC) has officially repealed the controversial Staff Accounting Bulletin (SAB) 121, which previously restricted banks from custodying cryptocurrency assets. This significant change comes with the introduction of SAB 122, allowing financial institutions to manage clients' digital assets without treating them as liabilities on their balance sheets.

SAB 121, implemented in 2022, faced backlash from both the cryptocurrency industry and lawmakers, as it complicated the custody of crypto assets and limited banks' ability to offer digital asset services. The repeal marks a notable shift in the SEC's approach to cryptocurrency regulation, particularly under the leadership of Acting Chair Mark Uyeda.

This decision is seen as a win for the crypto community, fostering an environment that encourages innovation and investment in digital assets. With SAB 122 in place, banks can now provide custodial services for cryptocurrencies like Bitcoin more feasibly, enhancing security and trust for users new to crypto.