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📌 SEC withdraws SAB 121 guidance on cryptocurrency accounting – Coincu

Key Takeaways The U.S. Securities and Exchange Commission (SEC) has withdrawn its guidance on cryptocurrency accounting (SAB 121), which required financial institutions to account for cryptocurrency assets as liabilities on the balance sheet. Cryptocurrency

– Key Takeaways The U.S. Securities and Exchange Commission (SEC) has withdrawn its guidance on cryptocurrency accounting (SAB 121), which required financial institutions to account for cryptocurrency assets as liabilities on the balance sheet.

A new SEC bulletin, SAB 122, clarifies that companies must disclose the risks associated with protecting cryptocurrency assets. It clarifies that they must, but no longer view them as liabilities.

The SEC has withdrawn its controversial SAB 121 guidance on cryptocurrency accounting, after stiff opposition from lawmakers and the crypto industry.

the U.S. Securities and Exchange Commission on Thursday, the SEC on Thursday issued an official statement saying it is revoking SAB 121 and issuing a new bulletin, SAB 122, to end the debate on the issue.

SAB 121, issued in March 2022, required financial institutions holding customers’ crypto assets to record those assets as liabilities on their balance sheets.

The cryptocurrency accounting guidelines were heavily criticized by the crypto industry, which criticized it for making the management of crypto assets too complicated and ultimately discouraging banks from offering digital asset custody services. Even members of Congress have expressed unilateral concerns about the increased compliance costs.

In short, the SEC’s new guidance overturns the interpretive guidance of SAB 121, which many found burdensome. However, the Commission clarified that while financial institutions must disclose the risks and liabilities associated with holding cryptocurrency assets, they are no longer required to identify and present such assets as liabilities.

To prepare financial statements, an institution must comply with the U.S. Financial Accounting Standards Board (FASB)

the updated guidance on cryptocurrency accounting is effective retrospectively for fiscal years beginning on or after December 15, 2024, with early adoption permitted. Ueda and his fellow commissioner Hester Pierce, who is currently overseeing the new cryptocurrency task force, had previously opposed the rules. They were adamantly opposed to making the rules more complicated.

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