SEC directs regulated firms on crypto disclosures

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The SEC issued a “Dear Issuer” letter, directing companies that have issued securities to consider whether they should update their information.

Why it matters: There has been a widespread fear of contagion in the crypto industry, and it’s serious enough that some fear it will ripple through the rest of the economy.

The sooner everyone knows who’s exposed, the better.

What they say: “Companies with ongoing reporting obligations should consider whether their existing disclosures need to be updated,” a preface to the letter reads.

The letter itself lays out a long list of ways a company could be exposed, such as having a weak custodian, underwriting, or other material threats. It also addresses things like steps taken to protect the business and notes: “The sample feedback does not address an exhaustive list of issues that businesses should consider.”

Conclusion: The SEC seems to be saying that companies whose funds are tied up in cash-starved platforms such as FTX, Genesis, BlockFi or Celsius should probably disclose it now.

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