Day One: Order on Digital Assets/Crypto (and SEC SAB 121)

KPMG Insights

• Digital/Crypto Push: Administration sets forth first action toward a “crypto policy”, to help facilitate additional ‘mainstream’ adoption.
• Agency Actions: Shortly after the issuance of the EO, the SEC moved to rescind SAB 121. Expect additional swift agency actions (e.g., statements, guidance/frameworks).
• Rules Coming: A “whole of government” Executive-level approach, along with expectation for Congressional and agency rules/actions.
• De-banking: A call for broader acceptance for banking clients (inclusive of digital/crypto businesses) will still require financial companies to employ sound bank risk management practices.

In the area of crypto and digital assets/technology, the new Administration issues a new executive order entitled “Strengthening American Leadership in Digital Financial Technology”. This order intends to promote U.S. leadership in digital assets (defined to include cryptocurrencies, digital tokens, and stablecoins) and financial technology, while repealing a prior Administration executive order on digital assets and a related Treasury framework. Initial actions related to this order include the SEC’s repeal of Staff Accounting Bulletin (SAB) 121.

Executive Order:

Related Actions:

Related actions have been taken by the SEC and the Senate Banking Committee, with the anticipation that more agencies/actions will follow.

• The SEC announces the decision to rescind interpretive guidance in Staff Accounting Bulletin 121, entitled Accounting for Obligations to Safeguard Crypto-Assets an Entity Holds for its Platform Users, which will be effective upon publication in the Federal Register.
• The SEC announces the launch of a new Crypto Task Force “dedicated to developing a comprehensive and clear regulatory framework for crypto assets.” It is expected to coordinate with federal departments and agencies and state and international counterparts, as well as to solicit public input.
• The Senate Committee on Banking, Housing, and Urban Affairs announces the formation of a new Subcommittee on Digital Assets to “ensure the committee is at the forefront of legislation to provide regulatory clarity for the industry.”