Donald Trump officially becomes U.S. president for the second time on Monday, January 20…
And many people are speculating that he could announce as many as 100 executive orders as soon as he takes office.
Several of these are expected to focus on pro-cryptocurrency regulation—most notably, the potential repeal of the SEC’s Staff Accounting Bulletin No. 121 (SAB 121).
In this article, we’ll look at why this is a huge deal for the entire crypto market…
But first, you need to understand what SAB 121 is.
A breakdown of SAB 121 and its implications
Put simply, SAB 121—which went into effect in 2022—requires banks to classify Bitcoin and other digital assets as liabilities on their balance sheets.
This regulation makes it challenging for U.S. banks to take custody of crypto assets. That’s because they must hold higher capital reserves to offset these liabilities—which limits their ability to lend money and lowers their earnings.
This regulation has discouraged banks from engaging in the crypto space. Banks have even faced pressure to distance themselves from crypto-related clients, leading to incidents of “debanking.”
In fact, Curzio Research was unceremoniously dumped by Bank of America—despite the fact that we generate no crypto-related revenue—all because Frank made a metaverse investment.
But the situation is poised to change as Trump takes office…
The impact of repealing SAB 121
If Trump does indeed repeal SAB 121 as people expect, it would have several significant implications for the crypto industry:
- Increased institutional adoption: Banks could hold custody of crypto assets, issue loans backed by Bitcoin, and treat digital assets as assets rather than liabilities. This would enable large institutions, with trillions in assets under management, to enter the crypto market. (See more details in the box below.)
- Improved transparency and accessibility: Banks could issue 1099 forms, simplifying tax reporting for crypto users. What’s more, FDIC insurance could be extended to crypto assets, enhancing consumer protection.
- Streamlined regulation: A repeal of SAB 121—plus an anticipated presidential “crypto council”—would foster collaboration between the SEC, CFTC, and other regulatory bodies to enhance regulatory clarity around crypto, making it easier—and less risky—to invest.
What is crypto custody and why is it a big deal?Having custody simply means the financial institution is legally responsible for holding and safeguarding a client’s assets, like stocks, bonds, or cash. The financial institution also maintains records of ownership and transactions, which are automatically sent to clients at the end of the year for tax purposes. Every major brokerage firm in America, from Goldman Sachs to Charles Schwab, is able to take custody of standard assets. But the ability to take custody of crypto assets is a big deal. With custody, banks could offer a range of crypto-related services, such as trading, lending, derivatives, and asset management. With Trump as president, we will likely see a wave of big banks like Bank of America, Goldman Sachs, Morgan Stanley, and US Bank provide custodial services for cryptocurrencies. This bridges the gap between traditional finance and crypto. Put simply, investment banks would be able to integrate crypto into their existing operations—opening the door to trillions in new capital having access to the crypto markets without the legal overhangs of the previous administration. |
A new crypto bull market
Any new crypto-related executive orders will likely send Bitcoin surging as institutional investors drive mainstream adoption in the crypto space.
And Bitcoin won’t even be the biggest winner—several smaller projects are poised to deliver even greater gains.
On January 23 at 7 p.m. ET, Frank is going live to share 2 altcoins he believes will outperform Bitcoin in 2025—and could even mint the next generation of crypto millionaires.
Plus, he and Daniel will answer your crypto-related questions.
