Dec 8, 2022 - Economy

SEC directs regulated companies on crypto disclosures

Illustration of a man's dress shoe hovering above shark-filled water

Illustration: Annelise Capossela/Axios

The SEC has published a "Dear Issuer" letter, directing companies that have issued securities to consider whether they should update their disclosures.

Why it matters: There's been a widespread fear of contagion in the crypto industry, and it's bad enough that some worry it could spill out into the rest of the economy.

  • The sooner everyone knows who is exposed, the better.

What they're saying: "Companies with ongoing reporting obligations should consider whether their existing disclosures should be updated," a preface to the letter states.

  • The actual letter spells out a long list of ways that a company might be exposed, such as having a shaky custodian, underwriting or other material threats.
  • It also addresses things like steps taken to safeguard the company, and notes: "The sample comments do not address an exhaustive list of the issues that companies should consider."

The bottom line: The SEC seems to be saying that companies with funds stuck on platforms with a liquidity crunch — such as FTX, Genesis, BlockFi or Celsius — should probably disclose it right now.

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