US SEC Issues New Crypto Risk Disclosure Guidelines

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Dec 8 (Reuters) – The U.S. securities regulator on Thursday advised public companies to consider whether they should disclose to investors any potential impact of turmoil in the cryptocurrency industry.

Advice from the Securities and Exchange Commission’s (SEC) corporate finance division – responsible for ensuring that public companies provide investors with key information – is the latest sign that regulators are on high alert for further new fallout following the collapse of major crypto firms including FTX and BlockFi Inc.

In guidance to public companies, the SEC outlined information companies may need to share with their investors, including whether companies have financially significant exposures to counterparties that have filed for bankruptcy or become insolvent.

The guidelines apply to all public companies exposed to recent crypto turmoil. Publicly traded companies are already required by law to disclose material financial information to investors, but the SEC frequently issues more specific guidance on how they should manage risks related to major events.

“Companies may have disclosure obligations under federal securities laws related to the direct or indirect impact that these events and collateral events have had or may have on their business,” the SEC said in a template. letter.

Public companies must be prepared to share with investors any risk of disruption in crypto asset markets, including depreciation in stock prices, loss of customer demand and risk of legal action, according to the guidelines.

Reporting by Chris Prentice in Washington; Editing by Matthew Lewis and Stephen Coates

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