@ Yaël
2025-02-07 10:39:28
Issued on January 23, 2025, Staff Accounting Bulletin 122 rescinds SAB 121, [originally issued](https://www.sec.gov/oca/staff-accounting-bulletin-121) by Gensler in March 2022. The previous bulletin provided guidance for financial entities and custodians holding any “crypto-assets,” requiring them to account for all cryptocurrencies primarily as liabilities on their balance sheets, rather than assets.
The revoking of SAB 121 empowers entities to assess whether their crypto-assets are classified as liabilities only if they believe a loss is probable.
For bitcoin holders who hold their own keys and run their own node, this distinction and its subsequent repeal made little difference.
But for the budding world of Bitcoin banking and finance, as well as the booming industry of custodial wallets and brokerages, it’s a game changer.
Rather than having to match cryptocurrency deposits one-for-one with other liquid assets in the case of a contingency, the new accounting guidance frees up institutions to mark the true values of crypto-assets on their books.
Rather than having to buy up $1 million in treasuries or cash in order to hold $1 million in bitcoin or cover losses, firms will now be able to recognize that $1 million as a true asset.
It may not seem like a revolution, but it may be the beginning of our bull-inspired Bitcoin banking era.
After years of byzantine persecutions of cryptocurrency developers, entrepreneurs, and ever-increasing regulations on Bitcoin, this paradigm shift at the nation’s premier markets regulator means traditional finance can finally include bitcoin and its crypto-offspring in its suite of financial products – with some caveats.
Practically, this rather benign-sounding rule lowers the barrier of entry for entities that want to offer bitcoin services to their customers. Whether it’s a bank, an exchange, or a liquidity service provider custodying funds, there is now a more sustainable path for offering bitcoin alongside any other type of account.
While a general crypto market framework is still far from established in law, the current situation grants fairness between both fiat money and cryptocurrencies in the hands of entrepreneurs who want to custody funds for their clients.
Practically, however, what does this mean for the average bitcoiner?
## **What will my Bitcoin bank look like?**
If we take a peek over at Europe, there are already FinTech firms and banking institutions that offer some level of bitcoin services.
Xapo Bank, a private bank headquartered in Gibraltar, [offers](https://www.xapobank.com/en) each customer a traditional bank account and IBAN number alongside an instantaneous deposit and withdrawal address for Bitcoin and Bitcoin Lightning, Tether, and USDC.
Considering Xapo [built](https://decrypt.co/8449/coinbase-acquires-xapo-crypto-custodian) the doomsday-proof custody vaults for bitcoin storage later bought by Coinbase in 2019, now the preferred institutional custodian for billions in assets, it’s easy to see why so many customers trust their custody.
And for those willing to make the tradeoff for custody of their funds, they do offer something attractive.
In a single account, a customer could deposit cash, exchange it to bitcoin, and withdraw to self-custody. They could also deposit bitcoin using Lightning, and then instantly convert that amount to send a traditional bank transfer to pay their rent or utility bills for those who don’t yet accept bitcoin.
Again, this may not be the solution for those who [prefer self-custody](https://www.btcpolicy.org/articles/self-custody-is-nonnegotiable), but it does offer an integrated fiat on and off ramp that others may find convenient.
Similarly, the UK-based FinTech firm Revolut offers its customers the [ability](https://www.revolut.com/crypto/) to deposit and withdraw their bitcoin within the app, as well as exchange it for whichever fiat currency they wish. For those who currently hold bitcoin in an ETF or some other custodial product, a move to an app such as this may be even more attractive.
And we already know US companies are begging to expand their own services to their customers.
Companies such as **Strike** and **Fold** have already begun to increase their Bitcoin banking services for American customers, offering account and routing numbers for [bill pay](https://strike.me/blog/announcing-strike-bill-pay/), as well as the ability to instantly swap between currencies if they wish.
Fold has the [ambition](https://blog.foldapp.com/fold-to-go-public/) to become one of the nation’s largest publicly-traded bitcoin financial services, looking to soon add mortgage and lending offers, as well as insurance solutions.
These financial firms will offer bitcoin for purchase, lending, and exchange, but we can also assume their suite of products will become more diverse and attractive for a more diverse customer base.
## **What about sovereign money?**
Educating Americans about the benefits of Bitcoin is an important task. So is improving our policy landscape so that all bitcoiners may flourish.
But if the Bitcoin network truly represents a revolutionary way to have and use neutral money, should we even consider Bitcoin banks something we want? How can peer-to-peer money integrate with the centralized custodial banking system so many of us are trying to escape?
Even the most primitive advantages of Bitcoin are built on its ability to be owned in a sovereign way, at the total exclusion of everyone who doesn’t have the private key. For many of us, this is all we desire and want. And for the rights to hold and use Bitcoin how we wish to be universally recognized.
However, we cannot dictate how the rest of our Bitcoin peers will engage with the network, nor what they inscribe into blocks if they have the computing power to mine them. If Bitcoin entrepreneurs freely compete to offer unique products and services to custody, trade, or lend bitcoin, the rules should make that easier and more possible.
For those who will still need to interact with the fiat world, they should be able to benefit from Bitcoin-first products and services designed with them in mind. And regulations should empower them rather than restrict what they can do.
Not every Bitcoin banking product will be attractive to every bitcoiner and that’s okay. But the positive evolution of e-cash, custodial services, lending, and insurance is something that will help leverage the power of Bitcoin. And that should be championed.
*Yaël Ossowski is a fellow at the Bitcoin Policy Institute.*
This article was originally published at the [Bitcoin Policy Institute](https://www.btcpolicy.org/articles/has-the-era-of-bull-inspired-bitcoin-banking-already-begun).