SAB 121 might not draw tears

Rules only matter if they're enforced.

Why it matters: The SEC is reportedly allowing some exceptions when it comes to the now infamous guidance memo called SAB 121 that asks banks that hold digital assets to account for them a certain way.

• Turns out there is a way banks and brokerages can sidestep reporting their customers' crypto on their balance sheets, according to a Bloomberg report last week.

Between the lines: The SEC, in a statement to Axios, denied that the staff guidance creates "exceptions," but said that "certain broker dealers and custody banks" have sufficiently addressed the risks identified in SAB 121.

• "As long as their customers receive the same protection for the safeguarding of crypto assets as they do in custody arrangements, their balance sheet treatment is also the same as custody arrangements," the statement says.

The big picture: Industry groups representing crypto firms, as well those representing banks, pushed to render the rule moot, an effort that passed the House as well as the Senate, with significant participation from Democrats, but was kiboshed when President Biden vetoed it.

• Last week's attempt to override the veto was unsuccessful, as expected, but perhaps SAB 121 will lose teeth via lack of enforcement.

Our thought bubble: 👆 That was one of many possibilities crypto lawyers suggested to Axios at Consensus a month ago.