The U.S. Securities and Exchange Commission (SEC) announced on Thursday, January 23, the repeal of Staff Accounting Bulletin (SAB) No. 121, a directive that imposed stringent accounting requirements on cryptocurrency custody for U.S. banks and financial institutions. The move, contained in the newly issued SAB 122, could serve as a more significant catalyst for Bitcoin’s price momentum than the projected US Bitcoin Reserve (SBR), according to several industry experts.

Implications for Bitcoin

Originally passed in 2022, SAB 121 required banks to classify cryptocurrencies held by customers as liabilities on their balance sheets. This classification has significantly increased the operational costs and complexity of financial institutions, effectively deterring them from offering cryptocurrency-related services. The requirement thus acted as a barrier, limiting the integration of Bitcoin and other cryptocurrencies into mainstream banking operations.

The withdrawal of SAB 121–SAB 122 effectively removes this accounting obstacle. SEC Commissioner Hester Peirce praised the decision on social media, stating: “Goodbye, bye, SAB 121! This wasn’t fun: http://SEC.gov | Employee Accounting Bulletin No. 122.”

The Bitcoin community reacted positively to the SEC’s decision. Andrew Parish, founder of x3, emphasized the importance of SAB 122 on X, stating“The withdrawal of SAB 121 is a bigger catalyst for Bitcoin than SBR. Bookmark this post.” Similarly, Fred Krueger, founder of Troop, highlighted broader market implications, noting: “SAB 122 is exceptionally good for Bitcoin. More significant than the Bitcoin Reserve which is also coming. Now look at how the banks start accumulating.

Vijay Boyapati, former Google engineer and author of The Bullish Case for Bitcoin, next developed on the transformative potential of the SEC’s actions, stating: “It really is difficult to emphasize how much change we are witnessing. We have gone from the worst possible anti-Bitcoin, anti-innovation, anti-growth and anti-business administration to the most Bitcoin-friendly administration you could hope for. This is 100% not included in the price.”

Michael Saylor, executive chairman of MicroStrategy, summed up the market sentiment succinctly in a tweet: “Repealed SAB 121 allowing banks to hold Bitcoin. 🚀” This aligns with Saylor’s previously described tgree catalysts for Bitcoin to reach $1 million per coin, where facilitating conventional bank deposit was the last open factor.

The easing of regulations is expected to catalyze increased institutional participation in the BTC and cryptocurrency markets. Brian Moynihan, CEO of Bank of America – the second-largest U.S. bank by assets – addressed the potential for broader adoption of cryptocurrencies during an interview with CNBC’s Andrew Ross Sorkin at the World Economic Forum in Davos, Switzerland. Moynihan said: “If the rules come in and make it actually legal to do business with them, you’re going to find that the banking system will suffer greatly on the transaction side.”

This finding is consistent with the SEC’s latest directive, indicating that banks are now more willing to develop and offer crypto services, including custody solutions, that were previously restricted under SAB 121. Removing these regulatory hurdles is expected to improve liquidity and availability of Bitcoin, potentially driving a fresh wave of demand similar to that seen in spot ETFs last January.

At the time of publication, the BTC price was $105,466.

Featured image created with DALL.E, chart from TradingView.com