Pro-Crypto Policies Surge As Banks Lag—Here’s How They Can Catch Up

Go ahead and continuously improvement concept, silhouette man jump on a cliff from past to future ... [+] with cloud sky background.
The landscape of digital assets is undergoing a significant shift as pro crypto regulatory clarity begins to take shape. Policymakers are moving faster than the price of Bitcoin. In recent weeks, significant developments, such as the U.S. Securities and Exchange Commission's (SEC) withdrawal of the contentious Staff Accounting Bulletin 121 (SAB 121) via SAB 122 and President Trump’s January 23, 2025 Digital Assets Executive Order, signal a bullish trajectory for crypto policies. Meanwhile, traditional banks, burdened by outdated frameworks and resistance to the emerging digital asset industry, risk establishing their foothold in this rapidly evolving sector.
The SEC's Withdrawal of SAB 121: A Victory for Crypto Firms
SAB 121, introduced during former SEC Chair Gary Gensler's tenure, required financial institutions to account for customer-held crypto assets as liabilities on their balance sheets. While purportedly intended to protect investors from insolvency risks, critics lambasted the guidance as overly punitive and impractical for innovation. SEC Commissioner Hester Peirce quickly celebrated the SEC’s decision to revoke SAB 121in an X/Twitter post, and bid SAB 121 “a not-so-fond farewell”.
SAB 122 directs firms to follow FASB and international accounting standards, which better suit the evolving crypto landscape. Peirce highlighted that this change removes a regulatory barrier, fostering innovation and collaboration between crypto firms and financial institutions. This rollback reduces operational burdens and encourages institutional participation, paving the way for broader crypto adoption.
The Digital Assets EO: A New Dawn for Policy Clarity
On the heels of the SEC announcement came President Trump's much-anticipated Digital Assets Executive Order. This policy framework overhaul addresses longstanding issues, including the legal categorization of digital assets, taxation, and cross-border applications​.
The EO outlines key pillars aimed at fostering innovation while ensuring consumer protection:
Clear Definitions: It mandates the classification of cryptocurrencies based on their functionalities—whether as securities, commodities, or payment tokens.
Tax Simplification: To reduce compliance complexities, the EO establishes a standardized approach to crypto tax reporting and defers capital gains for certain blockchain-based projects.
Global Collaboration: Recognizing crypto's global nature, the policy includes provisions for partnerships with international regulators to harmonize standards​​.
These measures signal the administration’s recognition of blockchain technology's potential to revolutionize finance and other industries.