SEC, CFTC propose amendments for large hedge fund crypto reporting
The authorities said investments in digital assets have become more common and there is a growing need to gather information on funds' crypto exposure.
US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have jointly proposed an amendment to Form PF.
The proposal seeks to distinguish between “digital assets” and “cash and cash equivalents” for large hedge funds to ensure more accurate reporting.
According to the proposal, a new sub-asset class should be created for digital assets reporting–meaning these firms will have to reveal their exposure to the crypto industry separately.
The proposal defined digital assets as assets issued through blockchain technology, including but not limited to coins, tokens, and virtual currencies.
Form PF is designed to help regulators identify systemic risks to economic stability.
The authorities noted that investments in digital assets have become more common, and there is a growing need to gather more information on the exposure of these funds to crypto. The recent market crash further highlighted the risk of market contagion.
Meanwhile, the regulators are also seeking comments from the public about whether they should use the term “crypto asset” or “digital asset.”
The regulators wrote:
“We view these terms as synonymous. We are proposing the term and definition to be consistent with the SEC’s recent statement on digital assets, and we believe that such term and definition would provide a consistent understanding of the type of assets we intend to address.”
The deadline for comment submission is Oct. 11.
US regulators are increasingly working towards the regulation of the crypto space. The SEC Chairman Gary Gensler has repeatedly urged crypto firms to talk to the agency while the CFTC is also increasing its industry oversight.