SEC Issues New Guidance Requiring Companies To Disclose Cryptocurrency Risks

The Securities and Exchange Commission has released new guidance, requiring companies that issue securities to disclose to investors their exposure and risk to the cryptocurrency market. From a report: The guidance comes about a month after FTX, one of the world's largest cryptocurrency exchanges, filed for bankruptcy after loan customer funds to a risky trading company that was founded by FTX's former CEO Sam Bankman-Fried. Over 100,000 customers were affected by the exchange's failure.

On Wednesday, SEC Chair Gary Gensler fended off accusations that the agency has failed to prevent crypto firms from misusing customer funds. Gensler also said the SEC would take more enforcement actions if the firms fail to comply with existing rules. Under the new guidance, companies will have to include crypto asset holdings as well as their risk exposure to the FTX bankruptcy and other market developments in their public filings. The company's bankruptcy filings indicate the company has over 1 million creditors.

Small step

[blahbooboo]

Well, it’s a small step in the right direction. I still can’t believe people buy these things when they have absolutely no real worth and no use.

The point isn't to make them disclose the risks

[rsilvergun]

it's to put them on notice that they will be prosecuted when they don't.

They don't want to bust the bubble, because that would be a mess. They're slowly letting the air out of the balloon.

Re:

[laughingskeptic]

In a little over a year the total cryto market cap has gone from $3T to $1T. $0T is just 6 months away at this rate. That's a pretty serious puncture.

Re:

[HiThere]

I'd expect a more exponential decay, and with possibly a floor well above 0...though how much is a good question. 10 cents for a bitcoin doesn't sound too outrageous, though.

Like requiring smoke alarms after the house burnt

[Ed Tice]

If any company still has a crypto-currency "risk," they are lying. Any exposure to crypto-currency should be marked to zero and taken as a loss. There's no value in crypto-currency, no value in any loans secured by crypto-currency, and the market-to-market price of a loan made to any company that would even touch crypto-currency is essentially zero. Anything crypto isn't a risk, it's a loss, and should be declared as such.

Re: Like requiring smoke alarms after the house bu

[1s44c]

But it's not ever going to be worth exactly zero so there is no reason to consider such a thing.

Re:

[Ed Tice]

A loan backed by crypto-assets very well may be worth exactly zero. Some crypto assets might go to exactly zero. Some loans made to crypto-companies might end up being worth slightly more than zero. Regardless, these assets need to be marked to market which is to say, if there is a market for the asset, what is the current trading price. If you lent money to a crypto-company, good luck selling that loan for more than about 1% of face value so that's how it should be marked on the balance sheet. And if