SEC Urges Companies to Share Crypto Exposure

The Securities and Exchange Commission (SEC) suggests public firms disclose their exposure to cryptocurrencies. 

In a guidance to companies posted on its website Thursday (Dec. 8), the SEC noted the turmoil in the crypto asset markets and said companies may have disclosure obligations under federal securities laws related to any impact from these events. 

“The Division of Corporate Finance believes that companies should evaluate their disclosures with a view towards providing investors with specific, tailored disclosure about market events and conditions, the company’s situation in relation to those events and conditions, and the potential impact on investors,” the guidance said. “Companies with ongoing reporting obligations should consider whether their existing disclosures should be updated.” 

The division said in the guidance that in filings made under the Securities Act of 1933 and the Securities Exchange Act of 1934, companies may be required to disclose more information than that expressly required to be included in statements or reports, if withholding that information would make the other information misleading. 

In addressing their exposure to developments in the crypto markets, companies may be obligated to disclose their exposure to counterparties and other market participants, risks related to their liquidity and their ability to obtain financing, and risks related to legal, investigative or regulatory activities around the crypto markets, the guidance said. 

“The sample comments do not address an exhaustive list of the issues that companies should consider,” the guidance said. “As always, companies should evaluate whether they have experienced or may be affected by matters characterized as potential risks and, if so, update their disclosures accordingly.” 

The posting of this guidance comes a day after it was reported that SEC Chair Gary Gensler said he already has enough power under the authority granted to the SEC to regulate the crypto industry. 

Gensler told Yahoo Finance Wednesday (Dec. 7) that the SEC has “the basic disclosure and governance requirements in place” to police the crypto field.