UpdatesDec 09, 2022

The SEC is urging companies to disclose their exposures to cryptocurrency assets

The US independent state agency has issued guidelines for public companies.

The United States Securities and Exchange Commission (SEC) has called on all publicly traded companies to disclose their exposures to cryptocurrency assets. In a public statement issued on Thursday, the agency noted that recent events in the cryptocurrency space have shaken the entire financial market. The agency also added that publicly traded companies are required to demonstrate whether a cryptocurrency situation could affect their business, in accordance with federal regulations.

SEC urges companies to disclose their exposure to cryptocurrency assets

The US Securities and Exchange Commission has published an official letter addressed to public companies. In this document, the agency touched on the topic of recent events that took place on the cryptocurrency market. This is primarily about the collapse of the Luna ecosystem and the bankruptcy of FTX. This year's bear market has led many companies in the digital currency sector to collapse, with leading virtual currencies losing much of their value as a result of the growing panic among investors.

In complying with their statutory disclosure obligations, all companies should consider the need to reflect developments in the digital asset market in their records, including business descriptions, risk factors and management discussions and analysis within such enterprises,” the letter noted.

Publicly traded companies governed by federal law should therefore disclose information regarding the company's exposure to cryptocurrency contractors and other market participants, risks related to the company's liquidity and ability to raise funding, and risks related to litigation, investigation or regulatory impact in crypto asset markets .

The SEC also noted that public companies are required to provide additional information so as not to mislead investors. The agency therefore decided that listed companies should consider the need to include the development of the crypto asset market in their reports.

Companies may have disclosure obligations under federal securities laws related to the direct or indirect impact that these events and related events have or may have had on their business,” the SEC noted.

The letter from the SEC noted that publicly traded companies should provide investors with specific, tailor-made information about market events and conditions, their position in relation to "these situations" and the potential impact on stockholders. Moreover, the US commission added that companies with ongoing reporting obligations should consider whether existing disclosures should be updated.