In March 2022, the SEC staff released Staff Accounting Bulletin No. 121 (SAB 121), which provides interpretive guidance for reporting entities that engage in activities in which they have an obligation to safeguard customers’ crypto assets. The guidance is applicable to certain reporting entities that apply US GAAP or IFRS.
SAB 121 requires a reporting entity that performs crypto asset custodial activities, whether directly or through an agent acting on its behalf, to record a liability with a corresponding asset. It also requires disclosure of the nature and amount of crypto assets the reporting entity is responsible for safeguarding for its customers.
SEC registrants are expected to comply with the guidance in the first interim or annual financial statements ending after June 15, 2022 (e.g., Q2 2022 for calendar year-end public companies), and apply it retrospectively to the beginning of the year. Certain other specified entities are also in the scope of the new interpretive guidance (see CA 3.7.1 in the Appendix).
Questions have arisen regarding the application of SAB 121, including the scope of the guidance. Through informal conversations with the SEC staff and others, we have formed perspectives on the interpretive guidance. This In depth discusses the guidance in SAB 121 and addresses frequently asked questions.
Read guidance at PwC ViewPoint