September 26, 2022

CFTC and SEC propose to oblige large hedge funds to report the risks of cryptocurrencies

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CFTC and SEC propose to oblige large hedge funds to report the risks of cryptocurrencies

The CFTC and SEC have proposed requiring major crypto hedge funds with over $500 million in assets under management to report risks associated with digital assets.

Commodity Futures Trading Commission (CFTC)and the US Securities and Exchange Commission (SEC) have proposed form amendments to Form PF for certain private fund investment advisors. This will allow the US Financial Stability Oversight Board (FSOC) to monitor systemic risks associated with digital assets and expand agency oversight.

CFTC Commissioner Christy Goldsmith RomeroGoldsmith Romero said that if the amendments go into effect, crypto-currency hedge funds will be required to report crypto-related risks to regulators without publicly disclosing the information. Hedge funds will provide information about the largest positions and borrowings.

“Our goal is to increase the usefulness of the collected data. Ensure that [the hedge fund] delivers risk disclosure as congress intended,” Romero added.

However, her colleague Caroline Pham did not support the proposal. In her opinion, these changes will negatively affect the development of the crypto industry in the United States.

“The initiative imposes overly broadobligations that may be unnecessarily burdensome. The requirement could cause significant operational issues and costs without a conclusive analysis under the Commodity Exchange Act (CEA),” she explained.

The CFTC will accept public comments on the proposed changes within 60 days.

Recently, the US House of Representatives Agricultural Committee introduced a bill that gives the CFTC the exclusive right to regulate transactions with cryptocurrencies.