Exterior view of the United States Securities and Exchange Commission (SEC) headquarters in Washington.
Jonathan Ernest | Reuters
The Securities and Exchange Commission issued new guidelines on Thursday, requiring companies that issue securities to disclose to investors their exposure and risk in the cryptocurrency market.
The advice comes about a month after FTX, one of the world’s largest cryptocurrency exchanges, filed for bankruptcy after lending money to a venture trading firm founded by former FTX CEO Sam Bankman. -Fried. More than 100,000 customers were affected by the failure of the exchange.
On Wednesday, SEC Chairman Gary Gensler pushed back against accusations that the agency has failed to prevent crypto firms from misusing client funds. Gensler also said the SEC would take more enforcement action if companies fail to comply with existing rules.
Under the new guidelines, companies will have to include holdings of crypto assets along with their exposure to the risk of FTX bankruptcy and other market developments in their public filings. The company’s bankruptcy filings indicate that the company has more than one million creditors.
The SEC’s Division of Corporation Finance developed a model letter after a selective review of findings made under the Securities Act of 1933 and the Securities Exchange Act of 1934, which direct companies to disclose “any other material information, if any, which may be necessary to make the required statements, in light of the circumstances in which they are made, not misleading,” according to the guidelines.
A suggested item in the letter asks the issuer to describe how the business failures and subsequent effects “have had or could have an impact on your business, financial condition, customers and counterparties, directly or indirectly.” Another asks for a description of “any material risk to you, direct or indirect, from excessive redemptions, withdrawals, or suspension of redemptions or withdrawals of crypto assets. Identify any material concentration of risk and quantify any exposure important”.
The SEC’s Corporate Finance Division has encouraged companies to adopt these recommendations when preparing documents “which are not generally subject to Division review prior to use.”
