SEC softens stance on crypto bill SAB-121, allowing banks to hold customer assets in "bankruptcy quarantine"

In a recent speech, Mount, the chief accountant of the Securities Exchange Commission (SEC), appeared to back down in the SEC's Staff Accounting Bulletin 121 (SAB-121), which restricts banks from offering digital asset custody services to customers.
According to an analysis by Thorne, head of research at Galaxy, Mount proposed exemptions that would allow bank holding companies and introductory brokers to circumvent SAB-121's rules on custody. Banks could avoid SAB-121's reporting requirements if they had written permission from state regulators to host client assets in "bankruptcy isolation," clearly specify criteria in contracts, and conduct regular threat and risk assessments.
Introducing brokers can also be exempt from SAB-121 requirements by meeting three conditions. Brokers cannot hold clients' private keys, act as third parties in transactions, or act as agents for introducing brokers.
Finally, the introductory broker must obtain a legal opinion proving that it is an introductory broker eligible for the digital asset exemption.
Previously reported, on July 11, the US House of Representatives voted on Wednesday on whether to overturn "President Joe Biden's veto power on SAB 121-related resolutions", but failed to pass, and the Securities Exchange Commission's cryptocurrency accounting policy remained unchanged.