SEC embraces accounting flexibility, paving way for crypto expansion.

TLDR:

Key Points:

• The SEC has adjusted its crypto reporting guidance.
• Flexibility from the SEC is a positive sign for crypto adoption.

The Securities and Exchange Commission has made exemptions and workarounds to large traditional finance institutions to circumvent onerous reporting requirements.

The SEC’s flexibility signals a change in regulatory attitude towards crypto, driven by internal policy or external pressure.

Financial institutions seeking to avoid SAB 121 must meet conditions to safeguard customer assets in case of bankruptcy, among other measures.

Key Elements of the Article:

The Securities and Exchange Commission (SEC) has shown flexibility in its accounting guidance related to crypto assets, which is a positive signal for the adoption of crypto.

The SEC’s decision to grant exemptions and workarounds to traditional finance institutions, specifically banks, is seen as a major relief after years of regulatory frustration and rulemaking.

The adjustments to SAB 121, which created reporting obligations for companies safeguarding crypto assets for platform users, have been welcomed by the crypto industry and its advisers.

The new measures will particularly impact large US traditional financial institutions, especially banks seeking to offer custodial and other crypto services.

The exemptions provided by the SEC do not cover all crypto reporting and compliance issues, but they are viewed as a step in the right direction, making it easier for advisers to assist client firms.