SEC’s Hester Peirce Criticizes SAB 121, Supports Broader Crypto Custody Access

In her recent remarks, Peirce emphasized that the bulletin was merely a “pronouncement” rather than a policy passed through the proper rulemaking channels.

Peirce highlighted that SAB 121 had the practical effect of excluding traditional financial institutions from participating in crypto custody, despite many of them having extensive experience in safeguarding traditional assets. She argued that this restriction limited competition and innovation in the custody space.

“What that pronouncement did is it said that lots of traditional entities… practically speaking, could not participate in providing custody for crypto,” Peirce stated.

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Peirce supports repealing SAB 121 to open the door for a wider range of custodians, including both traditional and crypto-native institutions. She stressed that expanding the pool of eligible custodians is ultimately in the best interest of asset safety and investor protection.

“We want to have as broad a pool as possible of potential custodians. That’s what’s best for the safety of people’s assets,” she concluded.

The push to roll back SAB 121 comes amid broader debates in Washington over how to regulate crypto custody, particularly around banking access and capital requirements.

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