Regulation
US SEC Rescinds Crypto Accounting Rule SAB 121 After Gensler’s Exit
The US Securities and Exchange Commission (SEC) has removed the much-debated and unpopular crypto accounting guidance Staff Accounting Bulletin No. 121 (SAB 121) only a few days after the exit of the SEC chair Gary Gensler.
US SEC Withdraws Controversial SAB 121
The U.S. SEC has posted a notice on its website that SAB 121 that was released in 2022 was withdrawn with the release of Staff Accounting Bulletin No. 122. SAB 121 stated that companies that have custody of cryptocurrencies for their clients must recognize these crypto-assets as liabilities in their financial statements.
The guidance had come under much criticism from the crypto industry and lawmakers, stating that the rule raised compliance costs and deterred banks from offering digital asset custody services. Meanwhile, the SEC noted that instead of following the guidance provided in the statement, entities should continue to use the Financial Accounting Standards Board (FASB) or International Accounting Standards (IAS) to account for the crypto assets.
Hester Peirce, a SEC commissioner and now the head of the agency’s recently created crypto unit, expressed support for the move. “Bye, bye SAB 121! It’s not been fun,” Peirce shared on X (previously Twitter) on Thursday. She had earlier described it as a rather rigid policy that is disadvantageous to the growth of innovation.
Criticism and Legal Challenges Surrounding SAB 121
Since its introduction, SAB 121 has been criticized by the crypto industry and members of both parties in Congress. Critics had complained that the rule was introduced in the absence of a proper public consultation process and that it was aimed at firms in the digital asset industry specifically. The banking industry also voiced out its concern, saying that the rule hampers their capacity to give out custodial services for the digital assets.
The US SEC’s former chairman Gary Gensler, who backed the rule, said it was needed to safeguard investors in case of bankruptcies. Gensler provided examples of bankruptcy courts claims that customer cryptocurrency was not shielded from creditors, and, therefore, the need to put more measures in place.
Nonetheless, in 2024, Congress tried to repeal SAB 121 through a bipartisan resolution by passing it in both the House and the Senate. However, the resolution was vetoed by then President Joe Biden. It remained effective up to the Thursday announcement in light of leadership switch at the SEC as well as beginning of a new administration under pro-crypto President Donald Trump who has affirmed his intention to make US a home for crypto.
Leadership Change Marks New Direction for the US SEC
Gary Gensler has stepped down as the US SEC Chair this week, and Mark Uyeda, the Republican Commissioner, has taken over as the acting chair. On Tuesday, Uyeda released members of the crypto task force led by Hester Peirce to tackle the crypto asset regulation.
“The SEC has primarily relied on enforcement actions to regulate crypto, which has created uncertainty,” the SEC said in a statement. “Clarity and practical solutions for those seeking compliance have been elusive.”
The task force wants to introduce a clearer and more predictable approach to regulating cryptocurrencies. This change has been made after a long time of criticism that Gensler has taken a reactive and punitive approach while at the SEC.
Industry and Lawmakers Welcome the Decision
The crypto industry and banking sector have hailed the withdrawal of SAB 121 as a move towards promoting innovation and decreasing the regulatory burden.
Paige Pidano Paridon, co-head of the Bank Policy Institute’s regulatory affairs, said that the decision would allow the banks to regain their capacity for being the secure guardians of digital assets.
At the same time, the lawmakers who voted against SAB 121 also announced their support. Pro-crypto Republican Senator Cynthia Lummis, the new digital assets subcommittee chair from Wyoming called the rule “disastrous” and celebrated its removal. Mike Flood, the representative who proposed a resolution to repeal SAB 121 in 2024, characterized the withdrawal as a positive sign of bipartisan support and shift in US crypto policy.
Kelvin Munene Murithi
Kelvin is a distinguished writer with expertise in crypto and finance, holding a Bachelor’s degree in Actuarial Science. Known for his incisive analysis and insightful content, he possesses a strong command of English and excels in conducting thorough research and delivering timely cryptocurrency market updates.
Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
John Deaton, a prominent crypto lawyer, has outlined a five-point plan for regulation by lawmakers in the United States. In his latest post on X, he calls for urgent action to establish clear rules that will support innovation, protect users, and bring stability to the crypto sector.
John Deaton on the Five Crypto Regulation Priorities
Deaton’s first recommendation is to pass a law on stablecoins. He believes this can increase demand for U.S. Treasuries and reduce the cost and delay in sending money across borders. This, he noted, will help the United States play a stronger role in global trade.
John Deaton wants the US. Congress should clearly define which tokens are securities and which are commodities. This will help decide whether the Securities and Exchange Commission (SEC) or the Commodity Futures Trading Commission (CFTC) should regulate them. Without such clarity, regulators may continue to clash over control, and projects may face confusion.
He also raised the need for crypto exchange regulation. Deaton wants strict rules to ensure customer funds are not mixed with company funds. He suggests that exchanges hold full reserves visible on the blockchain. This way, they can avoid high-risk activities like offering large amounts for lending or using customer funds elsewhere.
In addition, Deaton suggests easing the tax burden. He proposes removing the capital gains tax on small crypto payments and allowing people to pay federal taxes in cryptocurrency without facing more taxes.
Lastly, he urges Congress to revise or remove the Accredited Investor Rule. John Deaton believes the rule locks out too many people from early investment opportunities. He warns that lawmakers must act before the 2026 midterm elections to avoid delays caused by political changes.
Stablecoin Laws May Arrive Very Soon
It is important to add that Deaton’s views support ongoing developments in Congress. A bill known as the GENIUS Act is already being discussed.
It suggests that the Federal Reserve would manage large banks issuing stablecoins, while state bodies would handle smaller groups.
According to recent reports, the global market for stablecoins now exceeds $234 billion, raising hopes that new U.S. laws will soon follow.
As mentioned earlier by President Donald Trump, lawmakers are likely to fasttrack the stablecoin regulation. The current timeline is slated for Q2 this year.
SEC’s Shifting Position on Oversight
The SEC, which once took a hard line on crypto regulation, is now adjusting its stance
CoinGape noted earlier that the era of counterproductive oversight may be ending, as U.S. SEC and CFTC leaders have agreed to work together moving forward.
Historically, the SEC treated most tokens as securities, focusing on enforcement, while the CFTC took a softer approach to the markets. Recent laws like FIT21 aim to give the CFTC more control over decentralized assets.
With both regulatory oversight looking to create more cohesive plans to work, and the new leadership of Paul Atkins, the industry hopes to overcome challenges, reduce uncertainty, and foster greater clarity in crypto regulation.
Godfrey Benjamin
Benjamin Godfrey is a blockchain enthusiast and journalists who relish writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desires to educate people about cryptocurrencies inspires his contributions to renowned blockchain based media and sites. Benjamin Godfrey is a lover of sports and agriculture.
Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
The U.S. Securities and Exchange Commission (SEC) and Binance have requested a federal judge to extend the pause in their ongoing legal case for another 60 days.
This decision follows what both parties described as “productive discussions” and will provide more time for further deliberations.
US SEC and Binance Agree To Pause Legal Proceedings
The SEC initially sued Binance in 2023, accusing the exchange and its executives, including former CEO Changpeng Zhao, of violating federal securities laws, who is now the Strategic Advisor to Pakistan’s Crypto Council. The charges centred on Binance’s operation as an unlicensed clearing agency, broker, and exchange.
Additional allegations included the commingling of funds and manipulation of trading volume on Binance.US, its U.S. affiliate. These serious claims led to the ongoing litigation, which was paused multiple times to allow the parties to negotiate and clarify their positions.
Earlier this year, the SEC requested a 60-day pause in the case to allow for discussions around a new crypto task force to clarify how securities law might apply to digital assets. That pause was set to expire on April 14, 2025, but the SEC and Binance have now mutually agreed to extend it for an additional two months.
Reasons for the Continued Binance SEC Pause
The SEC, in its filing, explained that the discussions between both parties had focused on how the work of the newly formed crypto task force could impact the case. The task force, created to address regulatory issues in the cryptocurrency sector, may provide clearer guidance on how U.S. securities law applies to digital assets.
The SEC also pointed out that additional time was needed for authorization from the Commission before making any decisions or revisions in the scope of the case. Binance, for its part, agreed that an extension of the pause was in everyone’s best interest and would help to facilitate the ongoing discussions between the two sides.
“The continued pause is appropriate and in the interest of judicial economy,” the filing stated. Both the SEC and Binance have indicated that they aim to resolve the matter efficiently, without unnecessary delays or complications.
Crypto Task Force’s Role in the Case
The SEC’s newly established crypto task force may shape how digital asset transactions are treated under U.S. law. In a recent statement, Acting SEC Chair Mark Uyeda emphasized the importance of clear regulations for the cryptocurrency market and noted that the task force’s role is to create long-term solutions for regulating crypto trading.
Uyeda also suggested that a “time-limited, conditional exemptive relief framework” might be appropriate to allow innovation in blockchain technology while maintaining regulatory oversight. He encouraged market participants to contribute their views on where such exemptions might be necessary to foster industry growth.
The crypto task force’s efforts may influence how the SEC handles its case against Binance and its broader approach to regulating the digital asset space. The task force aims to ensure that U.S. law can adapt to the rapidly evolving technology behind cryptocurrencies while also protecting investors and ensuring market integrity.
Next Steps in the Legal Proceedings
With the case now paused for another 60 days, the SEC and Binance will continue their discussions and await further guidance from the crypto task force. The next update on the case’s status will come after the 60-day period.
As the pause continues, like the Ripple vs SEC case, stakeholders in the cryptocurrency industry will closely monitor the outcome of the discussions, as the case could set important precedents for future regulatory actions.
The SEC, as a result, has clarified that it is focused on ensuring compliance with securities laws, while Binance has stated its commitment to working within the framework of U.S. regulations.
Kelvin Munene Murithi
Kelvin is a distinguished writer with expertise in crypto and finance, holding a Bachelor’s degree in Actuarial Science. Known for his incisive analysis and insightful content, he possesses a strong command of English and excels in conducting thorough research and delivering timely cryptocurrency market updates.
Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
As crypto regulation gains ground in the US under pro-crypto President Donald Trump, US Senators are taking further steps to strengthen oversight of digital asset firms. Senators Thom Tillis and John Hickenlooper reintroduced the Proving Reserves of Other Funds (PROOF) Act, which aims to create new standards for transparency and fund management in the cryptocurrency sector.
US Senators Reintroduce PROOF Act Bill
According to Eleanor Terrett, US Senators Tillis and Hickenlooper have renewed their push for the PROOF Act, which was first introduced in 2023. The bill responds to concerns raised by the collapse of FTX, where customer funds were reportedly mixed with the company’s own capital and redirected to affiliated firms.
The PROOF Act would prohibit the co-mingling of customer assets by digital asset custodians and exchanges. It sets requirements for monthly third-party reserve checks, which would ensure that firms hold enough reserves to back customer holdings.
Independent auditing firms would perform these checks, sending the results to the U.S. Department of the Treasury.
Mandatory Proof of Reserves Checks
Under the US Senator’s proposed law, all firms offering digital asset custody or exchange services must undergo monthly Proof of Reserves (PoR) inspections. These checks would verify that firms hold the assets they claim to possess on behalf of their clients.
PoR uses cryptographic tools like Merkle trees and zero-knowledge proofs to verify balances without revealing user data. To ensure transparency, the inspection reports would be made public through the Treasury Department. If a company fails to comply, it will face civil fines that increase with repeated violations.
Although some firms have previously voluntarily shared proof of reserves information, these practices have been inconsistent and often lacked third-party verification. The PROOF Act would create a standardized process across the industry.
Preventing Fund Mismanagement in the Crypto Industry Through The PROOF Act
The US Senators’ renewed effort to pass the PROOF Act follows the financial failure of several crypto companies, most notably FTX. Reports showed that FTX moved customer deposits to its sister firm, Alameda Research, without proper disclosure or reserves, contributing to a major loss of trust in the sector.
Lawmakers aim to reduce the risk of mismanaged or missing funds by introducing strict reserve reporting requirements. The bill, as a result, intends to give customers more confidence that their digital assets are safe and properly accounted for by crypto firms.
The legislation also encourages more responsible behaviour from digital asset institutions by requiring them to follow clearly defined standards. These standards subsequently support regulatory oversight and prevent future financial harm to customers.
SEC Leadership and Regulatory Developments
The reintroduction of the PROOF Act follows Paul Atkins’s appointment as the new Chair of the Securities and Exchange Commission (SEC) in the United States. The Senate endorsed Atkins with a 52 to 44 majority in acknowledging his position on precise crypto regulations.
As a result, the Division of Corporation Finance of the SEC published guidance for crypto issuers as a follow-up to Atkins’ confirmation. The guidance also involves disclosure concerning business models and financial statements and risks associated with digital assets that fall under the definition of securities.
Subsequently, Senator Cynthia Lummis, a pro-Bitcoin legislator, has corroborated the development while acknowledging optimism about the future under Atkins. She stated that from her conversation with Atkins, she became confident in his handling of digital asset regulation.
Kelvin Munene Murithi
Kelvin is a distinguished writer with expertise in crypto and finance, holding a Bachelor’s degree in Actuarial Science. Known for his incisive analysis and insightful content, he possesses a strong command of English and excels in conducting thorough research and delivering timely cryptocurrency market updates.
Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
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