The SEC’s decision to revoke SAB 121 marks a seismic regulatory shift, offering firms more flexibility to align crypto accounting with broader U.S. GAAP and IFRS standards. While this reduces friction for institutions holding digital assets, it also raises critical questions about custodial practices, particularly rehypothecation.

Making the rehypothecation of Bitcoin custody illegal should be a top priority. Allowing custodians to lend or reuse customer Bitcoin exposes depositors to unnecessary risks and undermines the fundamental promise of Bitcoin ownership: trustless, self-sovereign control.

With this new regulatory landscape, the industry must push for clarity and safeguards to protect investors in this evolving market.