Trump's SAB 121 Repeal: The $3 Trillion Digital Asset Custody Race

In a decisive move that signals a dramatic shift in U.S. crypto policy, President Donald Trump's administration has rescinded Staff Accounting Bulletin 121 (SAB 121), a controversial SEC guidance that had effectively barred traditional banks from offering crypto custody services. This action, coupled with a sweeping executive order on digital assets, marks a fundamental departure from the previous administration's approach and sets the stage for increased institutional participation in the cryptocurrency sector[1][3].

Understanding SAB 121's Impact

Staff Accounting Bulletin 121, introduced in March 2022, required SEC registrants to record crypto assets held in custody as both an asset and a liability on their balance sheets[2]. This unorthodox accounting treatment effectively made it economically unfeasible for banks to provide crypto custody services, as it significantly impacted their capital requirements and balance sheet structure[9].

The Path to Repeal

The journey to SAB 121's repeal was marked by significant legislative efforts. In 2024, both the House and Senate passed a bipartisan resolution to overturn the bulletin, demonstrating growing recognition of its negative impact on innovation[24]. However, President Biden's veto maintained the restrictive framework until Trump's administration took action[1].

Trump's Executive Order and New Direction

President Trump's executive order, titled "Strengthening American Leadership in Digital Financial Technology," established a comprehensive framework for digital asset regulation[25]. The order created the President's Working Group on Digital Assets Markets and directed it to:

- Evaluate existing crypto regulations

- Propose new regulatory frameworks

- Consider the establishment of a national digital asset stockpile

- Promote dollar-backed stablecoins[27]