The Securities and Exchange Commission (SEC) released Staff Accounting Bulletin No. 122, which removes the previous guidance about protecting crypto-assets held for platform users in their Staff Accounting Bulletin Series. This change affects how companies account for their responsibility to safeguard these assets and requires them to determine if they need to recognize a liability for potential losses. Companies are advised to apply this change retrospectively starting after December 15, 2024, and must provide clear disclosures about how this change affects their financial statements. The aim is to help investors understand a company's obligations concerning crypto-assets.
Simple Explanation
The SEC took away old rules about how companies should handle and report on digital money they keep safe for their users. Now, companies must think carefully about if they need to say they might owe money if any of that digital money gets lost, and they have to tell people what's changed in the way they count this money.