For years, banks have navigated the digital asset space with caution, partly due to the complexities of regulatory guidance, especially in accounting for these novel assets. Previously, the SEC’s Staff Accounting Bulletin No. 121 (SAB 121) imposed a stringent requirement for entities safeguarding crypto assets for their platform users, including recognizing a liability and corresponding asset for the full fair value of crypto assets held in custody, creating significant balance sheet and capital burdens. However, in a significant shift for the industry, SAB 121 has been replaced by the newly issued Staff Accounting Bulletin (SAB 122). This pivotal change marks a move towards a more principles-based approached to accounting for crypto assets held in custody by banks.
Here’s how Banking CFOs can navigate this regulatory shift and ultimately gain a competitive advantage over other fintech companies…
