Seeds of Wisdom RV and Economic Updates Sunday Afternoon 1-26-25
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SEC REVOKES CRYPTO ACCOUNTING RULE FOLLOWING PRESIDENTIAL TRANSITION
While crypto advocates cheer the SEC’s decision, skeptics like Jacob King warn that the industry’s shift toward bank custody contradicts Bitcoin’s original vision of decentralization.
▪️In a dramatic policy shift, the SEC has revoked a crypto regulation that once shackled banks and custodians, marking a fresh start under the new administration.
▪️The controversial rule, introduced in 2022, had drawn fierce criticism from industry leaders who saw it as an unnecessary hurdle for financial institutions dealing with digital assets.
▪️Under Biden’s SEC, crypto firms found themselves entangled in legal battles, with enforcement actions reaching record highs before tapering off in the final months of Gensler’s tenure.
In a significant policy reversal, the United States Securities and Exchange Commission (SEC) has rescinded Staff Accounting Bulletin No. 121 (SAB 121), a controversial accounting guideline that mandated companies holding digital assets for clients to record these holdings as liabilities on their balance sheets.
The revocation came shortly after President Donald Trump’s inauguration, signaling a shift in the regulatory approach toward the emerging economy.
Background and Industry Reaction
Enacted during President Joe Biden’s administration in March 2022, SAB 121 aimed to enhance transparency and risk management in the burgeoning crypto sector. However, industry stakeholders criticized the rule for imposing burdensome reporting requirements, complicating the custody of digital assets, and increasing compliance costs.
The banking sector also expressed concerns, noting that the rule hindered their ability to serve as secure custodians for digital assets.
The recent revocation has been met with approval from crypto advocates. SEC Commissioner Hester Peirce, known for her pro-crypto stance, celebrated the decision by posting on X (formerly Twitter):
“Bye, bye SAB 121! It’s not been fun.”
Criticism from Outside the Crypto Industry
Despite the positive reception within the crypto community, the repeal has faced criticism from some financial analysts. Jacob King, CEO of WhaleWire, claims the crypto advocates are wrong for believing the revocation would allow banks to custody Bitcoin BTC for customers.
In response, Carl Horton countered the tweet, noting that many still want loans using their BTC as collateral:
“Some people, like children and the elderly, need custodians. Others want smooth inheritance transfers and others want loans using their BTC in custody as collateral. BTC is freedom money and you can interact with it any way you want.”
Previous SEC Actions Against the Crypto Industry
Meanwhile, under the leadership of former SEC Chair Gary Gensler during the Biden administration, the SEC adopted a stringent regulatory stance toward the cryptocurrency sector.
The agency initiated numerous enforcement actions against crypto companies, alleging violations such as fraud and unregistered securities offerings.
While these measures were intended to protect investors and maintain market integrity, critics argued that the aggressive approach stifled innovation and created an uncertain regulatory environment.
A report by Cornerstone Research highlighted that the SEC’s crypto-related enforcement actions declined by 30% in Gensler’s final year, with 33 actions initiated compared to 47 the previous year.
Despite the decrease, monetary penalties reached a record high, underscoring the agency’s continued focus on regulating the crypto industry.
The recent policy changes, including the revocation of SAB 121 and the establishment of a crypto task force under the new administration, suggest a potential shift toward a more balanced regulatory framework that fosters innovation while ensuring investor protection.
@ Newshounds News™
Source: CoinSpeaker
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EUROPEAN CENTRAL BANK PUSHING FOR DIGITAL EURO TO COUNTER TRUMP’S SUPPORT FOR STABLECOINS: REPORT
The European Union’s central bank is reportedly pushing for a digital euro to counter US President Donald Trump’s embrace of dollar-pegged private sector stablecoins.
European Central Bank (ECB) board member Piero Cipollone said at a conference on Friday that Trump’s new executive order on crypto could drive people away from banks, Reuters reports.
“I guess the key word here (in Trump’s executive order) is worldwide. This solution, you all know, further disintermediates banks as they lose fees, they lose clients… That’s why we need a digital euro.”
Earlier this week, President Donald Trump signed an executive order to evaluate the creation of a strategic national Bitcoin (BTC) and crypto stockpile.
The order also calls for the government to “promote the development and growth of lawful and legitimate” dollar-pegged stablecoins created in the private sector.
It further mandates that federal agencies halt any actions related to the development of a government-backed digital version of the dollar, otherwise known as a central bank digital currency (CBDC).
The administration’s new leadership at the U.S. Securities and Exchange Commission (SEC) also rescinded Staff Accounting Bulletin 121, a controversial rule that forced banks to identify crypto assets held on behalf of their customers as liabilities on their balance sheets.
@ Newshounds News™
Source: DailyHodl
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