The US SEC softens its stance on the crypto bill SAB-121, and banks are allowed to custody customer assets in a "bankruptcy isolation" manner

In a recent speech, Paul Munter, chief accountant for the U.S. Securities and Exchange Commission (SEC), appeared to back off on the SEC’s Staff Accounting Bulletin No. 121 (SAB-121), which restricts banks from providing digital asset custody services to customers. According to analysis by Alex Thorn, head of research at Galaxy, Munter proposed several exemptions that would allow bank holding companies and introducing brokers to circumvent SAB-121’s custody provisions. Banks can avoid SAB-121’s reporting requirements if they obtain written permission from state regulators to custody customer assets in a “bankruptcy-remote” manner, clearly define standards in contracts, and conduct regular risk assessments. Introducing brokers can also be exempt from SAB-121’s requirements by meeting three conditions. The broker cannot hold a customer’s private keys, act as a third party in a transaction, or act as an agent for the introducing broker. Finally, the introducing broker must obtain a legal opinion certifying that it is an introducing broker that meets the digital asset exemption. Earlier news, on July 11, the U.S. House of Representatives voted on whether to overturn "President Joe Biden's veto of SAB 121-related resolutions", but it was not passed, and the U.S. Securities and Exchange Commission's cryptocurrency accounting policy remained unchanged.