The US has taken steps towards supporting responsible growth and use of digital assets by introducing tokenization friendly accounting rules. On January 23, 2025, President Donald Trump issued an executive order to establish a Working Group on Digital Asset Markets, which aims to secure America’s position as a leader in the industry.
One key move is the revocation of Staff Accounting Bulletin 121 (SAB 121), an accounting rule that hindered financial institutions from custodying customer digital assets. The rule required entities to recognize liabilities and corresponding assets at fair market value for their obligation to safeguard digital assets, posing significant challenges for banks subject to regulatory reserve requirements.
The revocation of SAB 121 is seen as a significant step towards enabling tokenization innovation, allowing banks to offer digital asset custody services without the burden of complex accounting rules. The new rule, Staff Accounting Bulletin 122, provides greater flexibility and returns to pre-SAB 121 principles, allowing entities to report contingent liabilities under GAAP and IFRS Accounting Standards.
The US Securities Exchange Commission (SEC) has emphasized the importance of clear and thorough disclosures about risks, obligations, and uncertainties related to safeguarding digital assets. The SEC’s Working Group on Digital Asset Markets aims to develop a comprehensive and clear regulatory framework for digital assets, focusing on established guidelines, paths to registration, and disclosure requirements.
Industry leaders such as Bank of New York (BNY) and Etherealize.io have welcomed the new tokenization friendly accounting rules, indicating their intention to expand their custody services into digital assets. The US’s move is seen as a positive step towards fostering institutional participation in tokenization and broader market growth.
Source: https://crypto.news/us-focus-is-on-tokenization-friendly-accounting-rules