On January 23, the SEC released Staff Accounting Bulletin (SAB) No. 122 rescinding SAB No. 121, the latter of which highlighted the technological, legal and regulatory risks of safeguarding cryptoassets and required entities to recognize a liability on their balance sheets.. This rescission came as a result of contention with SAB No. 121. The guidance prompted several legislative actions, including first, GAO recommended in November 2023 that SAB No. 121 undergo congressional review (covered here); then, the House of Representatives passed a joint resolution to nullify SAB No. 121 in May 2024 (covered here); finally, then-President Biden vetoed that resolution, stating it would “inappropriately constrain” the SEC’s ability to “set forth appropriate guardrails and address future issues” (covered here). SAB No. 122 advises entities to apply existing standards for determining liabilities arising from contingencies. The rescission applies retroactively effective December 15, 2024.
