The US Securities and Exchange Commission (SEC) and the US Commodity Futures Trading Commission (CFTC) are looking to add new levels of disclosure applicable to large hedge funds and private property management companies. In it, they require such companies to report their cryptocurrency exposure.
In a statement yesterday, the SEC said it voted on the proposed amendment to Form PF. The additional regulation will increase scrutiny of major private asset managers, requiring them to disclose cryptocurrency locations and other information. In addition, the SEC and CFTC are considering supporting the amendment.
As part of an effort to monitor the private wealth management industry as a whole to avoid systemic risk, the proposal would also force companies to report on loan and loan agreements, other market exposures, and investment strategies.
The proposal would require companies to report exposure through Form PF. This form was compiled after the 2008 financial crisis to help the regulator oversee the private asset management market for bubbles and other stability risks.
The SEC and the US Federal Reserve (Fed) will use the data collected from the form to publish aggregate industry statistics. The proposal also recommends amending and extending the Form PF.
The SEC says the new reporting requirements will apply to companies with a net worth of at least $500 million.
According to SEC Chairman Gary Gensler, the purpose of the new reporting requirement is to monitor undercover markets for signs of overexposure, bubbles, and other possible systemic risks that could affect the entire financial industry.
“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.”
While not limited to the crypto industry exclusively, the move shows the SEC’s increasingly hawkish attitude towards crypto, especially Gensler.
The CFTC itself is in dispute with the SEC over its jurisdiction to regulate cryptocurrencies, but such progress represents like-minded government agencies on how large funds should report crypto holdings.
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