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To the Point - SEC staff rescinds guidance on obligations to safeguard crypto assets under SAB 121


Overview

Our publication summarizes Staff Accounting Bulletin (SAB) No. 122, which was issued by the SEC staff to rescind the interpretive guidance in SAB 121 under which entities that are obligated to safeguard a platform user’s crypto assets should present a liability and a related asset measured at the fair value of the user’s crypto assets.

Under SAB 122, entities should determine whether to recognize a liability related to the risk of loss under the arrangement by applying the recognition and measurement guidance for liabilities arising from contingencies in ASC 450, Contingencies, and IAS 37, Provisions, Contingent Liabilities and Contingent Assets.

SAB 122 is effective upon publication in the Federal Register and will apply to entities on a fully retrospective basis in annual periods beginning after 15 December 2024. The changes can be applied in any earlier interim or annual period included in filings after the effective date.

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