SEC demands businesses disclose their exposure to cryptocurrency concerns and bankruptcies
The corporate finance division of the Securities and Exchange Commission informed businesses of their disclosure obligations and offered suggestions for more information.
With the release of new recommendations from the Securities and Exchange Commission (SEC) of the United States, publicly traded corporations may now be required to declare their exposure to crypto assets.
The recent turmoil in the market for crypto assets has “caused widespread disruption,” according to a statement from the SEC’s Division of Corporation Finance, which also noted that businesses might be required to disclose whether these occurrences could affect their operations under federal securities laws.
With the release of new recommendations from the Securities and Exchange Commission (SEC) of the United States, publicly traded corporations may now be required to declare their exposure to crypto assets.
The SEC has also provided a sample letter that would be sent to businesses asking for more information about their exposure to cryptocurrency bankruptcy, asset volatility, and any other noteworthy developments in the cryptocurrency market.
The first query requests information from the company regarding any “important crypto asset market changes” that might affect its financial standing, performance, or stock value, including the volatility of cryptocurrency prices.
With the release of new recommendations from the Securities and Exchange Commission (SEC) of the United States, publicly traded corporations may now be required to declare their exposure to crypto assets.
Other inquiries focus on how inevitable bankruptcies have affected or might affect the company, including if there have been “excessive redemptions or withdrawals” and how much cryptocurrency is being pledged as collateral for loans.
Additionally, the model letter requests that the company outline any significant risks to its operations posed by new regulations about cryptocurrencies or by asserting jurisdiction over cryptocurrencies and cryptocurrency markets by domestic and international regulators or other governmental bodies.
The SEC stated that it “selectively evaluates filings […] to evaluate and optimize compliance with applicable reporting standards” in the following text.
To avoid deceiving investors, it was underlined that corporations are already required to provide any additional information that may be requested.
The agency continued, “Companies should evaluate the need to address crypto asset market changes in their filings in completing their disclosure duties.”
In recent months, the SEC has been preparing for increased crypto monitoring by building two new offices, one for industrial applications and services and the other for crypto assets. Recent criticism of the SEC and other agencies has focused on their failure to enforce laws in high-profile cases.