#SEC In-depth interpretation of major policy shifts

📌 Core Events
In March 2022, the SEC launched#SAB121 a rule that once mandated financial institutions to fully account for custodial crypto assets as liabilities on their balance sheets, triggering a strong backlash from the industry. In July 2024, as the regulatory environment evolved, the SEC officially replaced this rule with SAB 122, ushering in a new paradigm for crypto asset custody.

🔥 Three Key Points of Regulatory Change
1️⃣ Risk-oriented measurement: Removal of 100% liability accounting, replaced with FASB ASC 450-20 standards to assess actual risks (e.g., $100 million in custodial assets may only require a 2% risk exposure provision)
2️⃣ Retrospective execution mechanism: Annual reports will be mandatorily applicable after December 15, 2024, allowing for early adoption of the new regulations
3️⃣ Transparency in disclosure: Institutions are required to provide detailed explanations of the security mechanisms and potential risks of their custody solutions

🎯 Market Impact Analysis
▸ Acceleration of traditional institutions entering the market: Top investment banks like JPMorgan and Goldman Sachs have removed barriers to crypto custody business
▸ Reduction in compliance costs: Institutional custody fees are expected to decrease by 30% to 50%, driving trillions of dollars in incremental capital into the market
▸ Upgrade of audit standards: The Big Four accounting firms have initiated special training for crypto asset audits

💡 Deep Transformation in Regulatory Logic
SEC Commissioner Hester Peirce stated: "The repeal of SAB 121 proves that regulators are beginning to understand the uniqueness of crypto assets." This policy adjustment releases three major signals:
1️⃣ Recognition of the essential differences between crypto assets and traditional securities
2️⃣ Adoption of a dynamic regulatory framework that emphasizes substance over form
3️⃣ Paving the way for innovative products like spot ETFs

⚠️ Industry Controversy Focus
Although the new regulations have received support from institutions like#coinbase #MicroStrategy , there are still voices of doubt:

  • How will decentralized custody protocols apply to SAB 122?

  • Will the risk provisioning standards lead to "regulatory arbitrage"?

  • Does the rise of bank custody threaten the survival space of CEX?

📊 Data Pivot
According to Glassnode's assessment, after the implementation of the new regulations:
• The institutional-grade custody market size is expected to increase from $19 billion to $80 billion by 2025
• The valuation of compliant custody service providers is expected to triple on average
• The influx of insurance capital will increase custody security expenditures by 470%

🚀 Future Projections
When Wall Street's century-old risk control systems collide with blockchain technology innovations, it may give rise to:
► Hybrid custody solutions (on-chain + offline vaults)
► Real-time audit verification protocols
► Compliance#DAO Governance models

This regulatory paradigm shift marks the official entry of crypto assets into the "precision regulation" era. The race for the integration of traditional finance and crypto-native forces has just begun.

(This article does not constitute any investment advice; market risks should be approached with caution)

📌 Do you think the popularization of bank-based custody services will promote or hinder the development of DeFi or $BTC $ETF $BNB, etc.? Feel free to share your insights in the comments!