 Is the scrapping of SAB 121 a poisoned chalice for Bitcoin? 
2025-01-24
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The US Securities and Exchange Commission rescinded Staff Accounting Bullet 121 (SAB 121), which had asked financial firms holding crypto to record it as a liability on their balance sheets, reigniting debates over Bitcoin custody within the crypto community.
On Jan. 23, the SEC rescinded controversial crypto accounting rule SAB 121. It had faced widespread criticism from the crypto industry, which argued it created barriers for institutions seeking to custody digital assets.
While some viewed the development as a win, others said that encouraging banks to hold other people’s Bitcoin BTCUSD strayed from the original vision of its creator, Satoshi Nakamoto. 
Big bank custody threatens Satoshi’s vision 
Bitcoin advocate and MicroStrategy co-founder Michael Saylor praised the development, suggesting it opened the door for banks to custody Bitcoin.
Still, financial analyst Jacob King pushed back, arguing on X that the repeal does not explicitly mention Bitcoin or signal a significant shift. King also criticized the idea of banks holding Bitcoin for clients, claiming it undermines Bitcoin’s original purpose:
Some community members echoed the sentiment, saying that decentralization and “escaping big brother” was the original idea. Still, X user Carl Horton acknowledged a need for custodians.
He added that some holders want smooth inheritance transfers, while others want to use their Bitcoin in custody as collateral for loans. 
“BTC is freedom money and you can interact with it any way you want,” Horton added.
The institutional adoption and self-custody debate
The repeal of SAB 121 has brought the long-standing debate over institutional adoption versus self-custody back into focus. While some see institutional involvement as a way to drive mainstream adoption and liquidity, others fear it dilutes Bitcoin’s decentralized nature.
As large financial institutions increasingly adopt Bitcoin, many have discussed how this conflicts with self-custody, arguing that the current state of BTC may have strayed from Sathosi’s original vision. 
In 2024, Saylor received backlash from Bitcoiners when he said that Bitcoin holders had nothing to lose when transferring their BTC to institutions. He added that anyone who thinks state-sanctioned Bitcoin seizures are possible is a “paranoid crypto anarchist.” 
Ethereum co-founder Vitalik Buterin described Saylor’s remarks as “batshit insane,” arguing that there are plenty of precedents showing that Saylor’s strategy could fail. Buterin also said that this was not what crypto was about. 
After receiving backlash, the MicroStrategy executive said he supports self-custody for “willing and able” people. He said people have the right to self-custody or to choose another form of custody or custodian. He added that Bitcoin should welcome everyone as it benefits from all forms of investments by all types of entities. 