The Securities and Exchange Commission (SEC) has unveiled new guidance for financial disclosure firms, urging them to provide a more detailed account of their exposure to the digital currency industry in the wake of recent market turmoil.
guidelines described in Sample messageGo beyond mere quantity Cryptocurrency on the balance sheet.
The letter also includes guidance for exposure to third-party crypto market participants, risks related to companies’ liquidity, and their ability to obtain financing, as well as risks related to “legal action, investigations, or regulatory implications” in crypto markets.
To explain the latest guidance, the regulator referred to Securities Act Section 408 and Exchange Act Section 12b-20. These rules state that companies may be required to make such additional disclosures “as necessary to make the statements requested, in light of the circumstances in which they are made, and not misleading.”
The companies were also asked to discuss the “downstream impact” of how the bankruptcy of some third-party companies affects their companies as well as their partners and customers.
More broadly, the letter asked companies to disclose any “reputational damage” they might experience as a result of the recent market turmoil.
SEC guidance in the wake of the market chaos
This news comes at a time when the market has seen several companies facing serious difficulties as a result of their exposure to insolvent companies in the cryptocurrency industry.
Crypto exchange Gemini has been forced to stop withdrawing it Gemini earn As a direct result of the severe liquidity problems experienced by the Genesis cryptocurrency broker.
Gemini Earn offered customers interest in exchange for depositing their cryptocurrencies, between 0.45% and 8.5%, which was facilitation By using Genesis as a third party lender.
The SEC’s letter relates to events like Gemini and Genesis.
The regulator also recommended companies detail any risks of “excessive redemptions or withdrawals,” “stopped redemptions or withdrawals,” as well as any risks arising from “unauthorized or unauthorized customer access” to their offerings outside of jurisdictions in which they are located. They have the right to dispose of it
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