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SEC Issues New Guidance on Disclosing Crypto Risks



(Reuters) — The U.S. securities regulator on Thursday advised public companies to examine whether they need to disclose to investors any impact from the turmoil in the cryptocurrency industry.

The guidance from the Securities and Exchange Commission’s corporate finance division — tasked with ensuring that public companies provide investors with key information — is the latest sign that regulators are on high alert for further fallout in the wake of the collapse of major crypto firms including FTX and BlockFi Inc.

As guidance to public companies, the SEC established information that companies may be required to share with their investors, including whether the companies have any financially material exposures to counterparties that have filed for bankruptcy or become insolvent.

The guidance applies to all public companies that have exposure to the latest developments in crypto. Publicly traded companies are already required by law to disclose material financial information to investors, but the SEC often issues more specific guidance on how to manage risks from major events.

“Companies may have disclosure obligations under the federal securities laws related to the direct or indirect impact that these events and security events have had or may have on their business,”

; the SEC said in a sample letter.

Public companies should be prepared to share with investors all risks from disruptions in crypto-asset markets, including weakened share prices, loss of customer demand and risk of legal proceedings, the guidance said.


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