Top US Regulatory Agencies Seek To Mandate New Crypto Disclosure Guidelines for Private Funds

Two prominent US regulators are looking to add beefed-up crypto disclosure guidelines for private hedge funds.

According to a recent press release, the US Securities and Exchange Commission (SEC), in conjunction with the Commodity Futures Trading Commission (CTFC), is proposing enhanced reporting rules for large private funds.

The updated regulations would require funds to provide specific details on their investment strategies and financial positions, including crypto assets.

The SEC says the fresh guidelines would bolster protections for investors and help the regulatory body maintain proper oversight over the industry.

As stated by SEC Chairman Gary Gensler,

“In the decade since the SEC and CFTC jointly adopted Form PF, regulators have gained vital insight with respect to private funds. Since then, though, the private fund industry has grown in gross asset value by nearly 150% and evolved in terms of its business practices, complexity, and investment strategies.

I am pleased to support the proposal because, if adopted, it would improve the quality of the information we receive from all Form PF filers, with a particular focus on large hedge fund advisers. That will help protect investors and maintain fair, orderly, and efficient markets.”

Form PF is what private fund advisors use to report assets under management to the Financial Stability Oversight Council (FSOC) in order for the agency to monitor risk.

However, SEC Commissioner Hester Pierce opposes the idea, saying that the amended rules would be “adding questions of the nice to know, rather than need to know variety” to Form PF.

“Today’s proposal stretches a very limited data collection tool beyond its intended purpose…

Private fund investors – typically, institutional investors, such as insurance companies, university endowments, pension funds, and high income and net worth individuals – are capable of making their own risk assessments.

The SEC should not step in to protect them when their investments do not work out as hoped.”

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