SEC withdraws controversial cryptocurrency tax accounting bulletin

The U.S. Securities and Exchange Commission (SEC) issued a new employee accounting bulletin Thursday rescinding the controversial SAB 121.

SAB 121 mandated that banks and other public entities must show customers’ cryptocurrency assets on their own balance sheets. SAB 122 “repeals the interpretive guidance” and instead directs companies to use Financial Accounting Standards Board rules or International Financial Reporting Standards provisions.

“Staff are reminded that companies must continue to consider existing requirements to provide disclosures that help investors understand the company’s obligations to protect cryptocurrency assets it holds for others,” Thursday’s notice said. Yes.

The repealed guidance, SAB 121, was supported by former SEC Chairman Gary Gensler, who said it would protect investors in bankruptcy.

“What we actually found in bankruptcy courts is that they actually said it was unlikely that crypto assets would go bankrupt,” he told Reuters in 2023.

However, SAB 121 drew the ire of many in the cryptocurrency industry and was the subject of a Congressional Review Act resolution passed by both the House and Senate, but the resolution was vetoed by former President Joe Biden.

SEC Commissioner Hester Peirce, who was recently appointed to head the new cryptocurrency task force, said the SEC failed to explain its failure to issue guidance on how securities laws apply to cryptocurrencies after the 2022 guidance was adopted. has been opposed for a long time. Accounting disclosures may not be an appropriate vehicle for the type of guidance included in SAB 121.

Pierce announced his departure on Thursday.

Update (January 24, 2024 00:00 UTC): Add additional details.