SEC Unveils New Guidelines For Firms Linked With Crypto Sector

• The letter requested that businesses report any “reputational harm” they may have suffered.
• The announcement comes when many companies have been facing significant issues.

In light of the current market turmoil, the Securities and Exchange Commission (SEC) has released new rules for corporations making financial disclosures, requiring them to disclose a more comprehensive record of their connection to the crypto sector. The criteria, detailed in an illustration letter, extend beyond the balance sheet total of cryptocurrency holdings.

The letter also provides instructions for dealing with risks associated with “legal proceedings, investigations, or regulatory impacts” in the cryptocurrency markets, as well as issues connected to the liquidity and financing of businesses.

Regulator’s Intervention

Moreover, the regulator cited Rules 408 and 12b-20 of the Securities and Exchange Acts while describing the new regulations. Companies may be obliged to provide extra information “as may be necessary to make the required statements in light of the circumstances under which they are made, not misleading,” according to these regulations.

Furthermore, the downstream impact of the bankruptcy of some third-party enterprises on the firm. And its partners and customers were also encouraged.

More generally, the letter requested that businesses report any “reputational harm” they may have suffered. As a consequence of the recent market disruption. The announcement comes at a time when many companies have been facing significant issues. As a consequence of their exposure to insolvent enterprises within the cryptocurrency sector.

Since Genesis, a cryptocurrency broker, has been experiencing serious liquidity challenges, Gemini, a cryptocurrency exchange, has been forced to suspend withdrawals from its Gemini Earn service. The recent FTX collapse has allowed regulators to intervene and safeguard customers from drastic effects.