SEC’s Crypto Crackdown: What This Game-Changing Shift Means for Your Investments and the Future of Digital Finance
The Securities and Exchange Commission made history last year by permitting exchange-traded products (ETPs) to hold certain spot cryptocurrency assets, including bitcoin and ether. New guidance released by the agency this month suggests that the SEC is laying out a path for expanding the universe of crypto-related financial instruments. At the same time, financial industry stakeholders and regulators alike continue to weigh in on regulating tokenized securities.
The guidance on disclosure considerations for crypto ETPs provided in a July 1 statement from the SEC Division of Corporation Finance didn’t contain any major surprises. For example, ETP issuers should explain “risks related to the underlying crypto asset(s) and crypto asset markets that pose a risk of investor losses, including price volatility, theft of private keys and other hacking incidents, and the risk of price volatility from other parts of the crypto asset markets,” according to the statement. The agency instructed issuers to be transparent on issues such as calculations of net asset value and describing material information about products’ underlying crypto assets. The statement also covered more crypto-specific concerns like explaining procedures to maintain secure custody of crypto assets.
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