The Securities and Exchange Commission (SEC) is asking publicly traded companies to tell investors about their involvement in struggling cryptocurrency companies (through CNBC). In posted a message on Thursdaythe SEC says companies may be required by federal law to disclose whether their operations or finances have been impacted by the turbulence rocking the crypto market.
The SEC’s Corporation Finance Department — the department that ensures companies disclose necessary information to investors — has issued the guidelines, which should help companies prepare disclosure documents. It doesn’t formally introduce any new disclosure requirements, but the set of recommendations is a sign that the regulator is keeping a closer eye on crypto.
As noted in the sample letter, the SEC says companies should discuss whether they are exposed to crypto companies that have filed for bankruptcy, suspended withdrawals, or experienced an excessive number of withdrawals. It also asks companies to outline the steps they are taking to secure customers’ crypto assets, as well as whether the disruption in the crypto market has caused them “reputational damage”.
The SEC has come under fire for its handling of crypto regulation, with Senator Elizabeth Warren (D-MA) told the agency to “adjust” after the implosion of FTX last month, adding that the SEC has “fallen far behind” when it comes to tackling crypto fraud. On Wednesday, SEC Chairman Gary Gensler defended the bureau’s work during an interview with Yahoo Financestating that the SEC is “already appropriate” and that it has taken 100 enforcement actions against crypto companies.