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SEC, CFTC Want Private Funds to Report Crypto Holdings

The new proposal would require wealth managers with a net asset value of over $500 million to report their crypto holdings.

SEC, CFTC Want Private Funds to Report Crypto Holdings
Shutterstock cover by Omelchenko

Key Takeaways

  • The Securities and Exchange Commission has issued a proposal that would require large private wealth managers to report their crypto holdings. The Commodity Future Trading Commission is also weighing supporting the update.
  • The move is part of a larger effort to increase regulatory oversight over a furtive marketplace.
  • Despite ongoing debates over SEC and CFTC jurisdiction over cryptocurrency, today's proposal suggests a potential alignment on reporting requirements.

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The Securities and Exchange Commission and the Commodities Futures Trading Commission are hoping to add new levels to the disclosures they require from large hedge funds and private wealth management firms. Among these would be the requirement that such firms report their cryptocurrency exposure.

SEC, CFTC Align on Crypto Reporting

New crypto reporting requirements could be on the way for large private fund managers.

The Securities and Exchange Commission published a statement today, saying it had voted to propose amendments to Form PF. The amendments would intensify scrutiny applied to large private wealth managers, requiring them to disclose their cryptocurrency positions, among other information. Alongside the SEC, the Commodities Futures Trading Commission is weighing supporting the amendments, the statement said.

As part of a broader effort to monitor the private wealth management industry for systemic risks, the proposal would also require firms to report on their borrowing and lending arrangements, other market exposures, and investment strategies.

The proposal would require firms to report their exposure through Form PF, which was created in the wake of the 2008 financial crisis to help regulators monitor private wealth management markets for bubbles and other stability risks. Data gathered from the form is then used by the SEC and Federal Reserve to publish aggregated statistics about the industry. The proposal would also revise and expand Form PF itself.

The SEC has said that the new reporting requirements would apply to firms with a net asset value of at least $500 million.

According to SEC chair Gary Gensler, the purpose of the new reporting requirements would be to monitor otherwise secretive markets for signs of overexposures, bubbles, and other systemic risks that could impact the overall 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,” Gensler said in a statement.

While not limited to the crypto industry, the move is consistent with what many have perceived to be an increased hawkishness toward crypto on the part of the SEC, particularly Gensler. While the CFTC is itself a contender for the regulatory body under which cryptocurrency may ultimately regulated, this development suggests the government agencies may be aligned on how large funds should report their cryptocurrency holdings.

Disclosure: At the time of writing, the author of this piece owned BTC, ETH, and several other cryptocurrencies. 

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