SEC asks companies to consider cryptocurrency in filings

A letter from the Securities and Exchange Commission to the U.S. public companies asking firms to evaluate their disclosure obligations, including a specific tailored disclosure, about how recent bankruptcies and financial distress may have hit their business, is being sent by the Securities and Exchange Commission.

In their release, the SEC s division of corporate finance said that companies should consider the need to address cryptocurrencies in their filings generally, including in their business descriptions, risk factors and management's discussion and analysis.

In an attached sample letter, the agency asks companies to disclose their relationship with other firms that have filed for bankruptcy, have experienced excessive redemptions bank runs, have unaccounted for, or have experienced material corporate compliance failures. SEC Chair Gary Gensler told Yahoo Finance on Wednesday that the agency would enforce securities laws already in place, asked whether the business needed its own set of tailored rules.

Gensler noted that the SEC has already taken 100 enforcement actions against cryptocurrencies firms, with a few dozen coming under his tenure.

Gensler told Yahoo Finance that the basic message I've had is the same public message as a private message. Your field will not last long beyond the norms of public policy. The letter encourages companies to share how they safeguard customer assets and what governance protocols they have set in place to prevent conflicts of interest.

The agency recommends firms discuss whether market conditions have affected how their business is perceived, how pending cryptocurrencies regulation could affect financial conditions or businesses, particularly in a company's share price, customer demand, debt financing or legal proceedings pending or known to be threatened. The SEC's letter came after offshore crypto exchange FTX filed for Chapter 11 bankruptcy on November 11. The Bahamas-based company, which has an estimated $8 billion hole in its balance sheet, has been a subject to a wave of financial contagion amongst the industry's other firms.

The business lent money to the former FTX CEO and founder Sam Bankman- Fried's trading firm, Alameda Research, after reports and bankruptcy court documents showed that the business lent money to the former FTX CEO and founder Sam Bankman- Fried. In a court document, FTX's new management called the company's collapse a complete failure of corporate controls. The events surrounding FTX's collapse have caused BlockFi to declare bankruptcy, while others, such as the Genesis Trading and Gemini, have paused withdrawals and begun to organize as creditors.

According to Coindesk, Genesis owes creditors around the weekend $1.8 billion, $900 million of which belongs to Gemini. The total market value of all cryptocurrencies fell by $200 billion to $860 million over the past month, according to Coinmarketcap.

David Hollerith is a senior reporter at Yahoo Finance who covers the criptocurrency and stock markets.