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The Vault
April 22, 2022
Crypto-Assets Accounting, Reporting, and Disclosure Obligations Staff Accounting Bulletin Released by SEC
The Securities and Exchange Commission (“SEC”) released Staff Accounting Bulletin No. 121 (“SAB 121”) on March 31, 2022. SAB 121 provides SEC staff’s views regarding accounting treatment of obligations incident to a reporting company’s custody of crypto-assets for its platform users. The staff notes that they have observed an increase in the number of companies providing platform users with the ability to transact in crypto-assets and that performing these services present unique risks not otherwise widely present with custody of non-crypto-assets. Specifically, the staff provides examples of technological risks, legal risks, and regulatory risks—all of which the staff indicate can have a significant impact on the reporting company’s operations and financial condition. In an effort to ensure investors have all appropriate information at their disposal to make informed decisions, the staff calls for certain measures that certain companies should take to recognize, measure, and disclose these risks. To achieve this end, SAB 121 utilizes three fact-based scenarios, each with a related question and an interpretive response.
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