The U.S. Securities and Exchange Commission (SEC) is scrutinizing the crypto market and trying to find companies affected by the fall of FTX—calling for them to disclose that they doing business.
- Crypto experienced one of the largest collapses in its history with the bankruptcy of the FTX exchange on November 11.
- While bankruptcy lawyers continue to untangle the mess, the federal government is beginning to crack down on cryptocurrency and demand greater transparency.
- The SEC released guidance on Thursday that publicly traded companies affected by the fall of FTX or other ongoing crypto issues such as the “crypto winter” need to disclose details to investors.
Why it’s News
The SEC is calling for more direct disclosure regarding crypto assets than merely those touched by FTX. With the crypto market chilling, the commission appears to be taking a larger step to begin addressing market uncertainty and volatility.
“Recent bankruptcies and financial distress among crypto asset market participants have caused widespread disruption in those markets. Companies may have disclosure obligations under the federal securities laws related to the direct or indirect impact that these events and collateral events have had or may have on their business,” says the commission.
This reflects a greater level of scrutiny being placed on crypto markets and companies with assets tied to the crypto economy. It also offers the SEC a chance to observe how deeply the fall of FTX affected the entire market—investigating the full impact of the collapse.
The SEC wants to prevent another FTX situation, and requested companies with crypto assets take additional steps to safeguard assets and monitor their policies and procedures, Bloomberg reports.
“The wider SEC has been in a general standoff with much of the crypto industry, insisting that many of the digital assets platforms should be registered exchanges, while many of those firms argue that they’re either not involved with securities or the agency hasn’t properly defined crypto securities. SEC Chair Gary Gensler reiterated his views again that the agency has made clear what crypto companies should do, telling a reporter on Wednesday that ‘the rules are there,’ and that ‘law firms know how to advise their clients to comply,’” says CoinDesk.