14th January 2025 > > SAB 121 & Gensler's descent into obscurity.

tl;dr

SAB 121 is almost certainly now a goner, to everyone’s benefit. Gensler is bowing out with his professional reputation in tatters.

Market Snap

Market Wrap

A low print at $89,260 yesterday got the naysayers all very excited but it was the briefest visit to a sub-90k price for the first time since early in November. Speculation is growing about how quickly Trump will act crypto-wise from next Monday. We can expect heightened volatility until there is more clarity on just how pro-crypto he intends to be.

Curious Cryptos’ Commentary – SAB 121

Soon, oh so very soon, I will never have to mention SAB 121 again.

SAB 121 is an accounting bulletin issued by the SEC that requires regulated banks to hold capital equal to 100% of the market value of cryptos that are being held in custody for that bank’s clients. No other asset has such a draconian restriction imposed upon it. It is a very clear abuse of the SEC’s power and authority which ensures that the provision of crypto custodial services is uneconomic for clients and banks.

Both houses passed legislation last year that rescinded SAB 121 but Biden wielded his presidential veto to keep this illiberal policy in place. The CCC has long campaigned for its abolition.

Yesterday the Washington Post reported that Trump will sign an executive order on his first day in the office – next Monday – acceding to our demands. It is nice to have one’s work and effort recognised in this way. As the Post explained:

“The Trump team has made it very clear that this is a priority”.

Removing SAB 121 opens the door to regulated banks providing crypto custodial services to all clients, turbocharging the attractiveness of cryptos as an investment to those clients. The effect on demand for BTC is in one direction only.

Nice.

Curious Cryptos’ Commentary – The SEC

In yet another blow to the Gensler’s legacy of exceeding his legal powers and responsibilities, a court has ruled that the SEC’s actions have once again been “arbitrary and capricious”, reflecting the exact language used by an earlier court judgement that paved the way for the launch of spot BTC ETFs.

The issue this time is that the SEC has refused a request to provide clarity and guidance on how businesses like Coinbase can assess whether specific crypto assets are securities or not. Judge Stephanos Bibas had this to say:

"Rather than force the agency to make a rule, we order it to explain its decision not to. Indeed, a rule may not prove necessary to solve the notice problems here; the agency could just state its position on crypto assets unequivocally.

It should not give yet another poor explanation in an already-long line of them."

Ouch says Gensler.

Stephanos then told us what was already very obvious from the SEC’s actions since Gensler took the helm:

"If the SEC were to promulgate a rule banning crypto assets, it would surely face legal challenges. One might wonder if an agency whose mission is maintaining fair, orderly, and efficient markets is authorized to ban an emerging technology. So, the SEC has sidestepped the rulemaking process by pursuing a de facto ban through enforcement instead."

Staff at the SEC must now be thoroughly dispirited at the leadership they have had to endure these last few years. Monday cannot come soon enough for them.others wake up to what is staring them in the face.