SEC directs public companies to disclose crypto risks

The SEC, the US capital markets regulator, has advised public companies to consider whether to disclose to investors whether they are potentially affected by the turmoil in the cryptocurrency sector. The SEC’s corporate finance division has issued new guidance for public companies. “Recent bankruptcies and financial distress among crypto asset market participants have caused widespread disruption in these markets. Companies may have an obligation under the federal securities laws to disclose whether they have been directly or indirectly affected by these developments,” the statement said. With this guidance, the SEC has taken its first public step towards alleviating uncertainty in the cryptocurrency market since the FTX collapse. According to the guidance, companies are required to assess the overall impact of crypto asset market developments, examine whether they have counterparty risks, and additionally assess whether there are risks related to their liquidity and ability to obtain financing.