©REUTERS
By Yasin Ebrahim
Invsting.com — The Securities Exchange Commission has issued a new mandate that requires public firms to report their cryptocurrency exposure in their official filings.
The SEC Division of Corporate Finance sent out a notification to entities subject to securities regulation, instructing them to include their crypto asset holdings and market risks in their public documents.
“Companies should consider the need to address crypto asset market developments in their filings,” said an SEC official. He emphasized that firms should provide clear and comprehensive disclosure of the potential effects of digital asset market movements.
Potential cryptocurrency exposure could have a significant impact on an organization’s exposure to counterparties, other market participants, and liquidity-related risks. It may also lead to various regulatory and legal impacts.
The SEC was heavily criticized for its perceived lack of action against digital asset firms with weak disclosure and governance practices after the collapse of FTX cryptocurrency brokerage.
SEC chairman Gary Gensler declared this week that the regulator would take further steps against companies that violate existing rules.