Crypto glossary
SAB 121
SAB 121 was SEC accounting guidance making firms that custody crypto for clients record it as a balance sheet liability; it was rescinded in 2025.
Staff Accounting Bulletin No. 121, issued by SEC staff in March 2022, applied to public companies and others reporting to the SEC that safeguard crypto-assets for customers. They had to record a liability for their obligation to safeguard those assets, with a matching asset, both at fair value. Its stated reason was the legal and technological risks specific to crypto custody, such as uncertainty over how custodied assets would be treated in bankruptcy.
For banks, the effect was severe. Putting customer crypto on the balance sheet triggered capital and liquidity requirements that made custody uneconomic, so most regulated banks stayed out of the business. Congress voted to overturn the bulletin in 2024, but the measure was vetoed.
In January 2025 the SEC staff rescinded SAB 121 by issuing SAB 122, which returned custodians to the general accounting standards for contingent liabilities. The change was widely seen as opening the door for banks to offer crypto custody, subject to their banking supervisors.
Example
Under SAB 121, a bank holding 1 billion dollars of bitcoin for asset managers would have had to show a 1-billion-dollar liability on its balance sheet. After SAB 122, the bank evaluates custody risk under ordinary standards instead.