The US Securities and Exchange Commission (SEC) introduced on Thursday, January 23, the rescission of Staff Accounting Bulletin (SAB) No. 121, a directive that had imposed stringent accounting necessities on crypto custody for US banks and monetary establishments. The transfer, encapsulated within the newly issued SAB 122, is poised to function a extra substantial catalyst for Bitcoin’s worth dynamics than the anticipated US Bitcoin Reserve (SBR), in accordance with a number of business specialists.
Implications For Bitcoin
Originally enacted in 2022, SAB 121 mandated that banks classify customer-held cryptocurrencies as liabilities on their steadiness sheets. This classification considerably elevated the operational prices and complexities for monetary establishments, successfully deterring them from providing crypto-related companies. Thus, the requirement acted as a barrier, limiting the combination of Bitcoin and different cryptocurrencies into mainstream banking operations.
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The withdrawal of SAB 121 via SAB 122 successfully removes this accounting obstacle. SEC Commissioner Hester Peirce lauded the choice on social media, stating, “Bye, bye SAB 121! It’s not been fun: http://SEC.gov | Staff Accounting Bulletin No. 122.”
The Bitcoin group has responded favorably to the SEC’s determination. Andrew Parish, founding father of x3, emphasised the importance of SAB 122 on X, asserting, “Rescinding of SAB 121 is a bigger catalyst for Bitcoin than the SBR. Bookmark this post.” Similarly, Fred Krueger, founding father of Troop, highlighted the broader market implications, noting, “SAB 122 is extremely good for Bitcoin. More significant than the Bitcoin Reserve, which is also coming. Now watch the Banks start accumulating.”
Vijay Boyapati, an Ex-Google engineer and the creator of The Bullish Case for Bitcoin, additional elaborated on the transformative potential of the SEC’s motion, 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.”
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Michael Saylor, Executive Chairman of MicroStrategy, succinctly captured the market sentiment together with his tweet: “SAB 121 has been rescinded, allowing banks to custody Bitcoin. 🚀” This aligns with Saylor’s beforehand outlined tgree catalysts for Bitcoin reaching $1 million per coin, the place the facilitation of conventional financial institution custody stood as final open m issue.
The regulatory easing is anticipated to catalyze elevated institutional participation within the BTC and crypto market. Brian Moynihan, CEO of Bank of America—the second-largest US financial institution by belongings—addressed the potential for broader crypto adoption throughout an interview with CNBC’s Andrew Ross Sorkin on the World Economic Forum in Davos, Switzerland. Moynihan said, “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 assertion aligns with the SEC’s newest directive, indicating that banks are actually extra prone to develop and supply crypto companies, together with custody options, which had been beforehand constrained underneath SAB 121. The elimination of those regulatory hurdles is anticipated to reinforce the liquidity and accessibility of Bitcoin, probably driving a brand new wave of demand just like the spot ETFs in January final yr.
At press time, BTC traded at $105,466.
Featured picture created with DALL.E, chart from TradingView.com
