WASHINGTON, D.C.—Benjamin Schiffrin, Director of Securities Policy, issued the following statement regarding the SEC’s decision to rescind Staff Accounting Bulletin (SAB) 121:

“The SEC’s decision to rescind SAB 121 endangers investors and the financial system as a whole. SAB 121 provided that companies holding crypto assets for customers face unique risks and should therefore reflect those assets as liabilities on their balance sheets. These risks include the risk of loss from an inability to safeguard the crypto assets. As a result, under SAB 121, banks would have had to have capital to protect against the liabilities posed by crypto assets, thereby avoiding crashes, contagion, and bailouts. So SAB 121 was an important measure to protect investors and the financial system from the potentially disastrous consequences of another crypto-market meltdown.

“The decision to rescind SAB 121 bodes ill for how investors will fare at the SEC under the new administration. The SEC should be taking action to protect investors from the fraud that pervades the crypto industry. Instead, in one of its first actions under the new administration, the SEC has made it more likely that investors will suffer from a failure to insulate the financial system from the risks crypto poses and the next crypto crash.”

###

Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.org.