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

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The CFTC and SEC have proposed requiring large cryptocurrency hedge funds with more than $500 million in assets under management to report risks associated with digital assets.

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

CFTC Commissioner Christy Goldsmith RomeroGoldsmith Romero said that if the amendments come into force, cryptocurrency hedge funds will be required to report risks associated with cryptocurrencies to regulators without disclosing the information publicly. Hedge funds will provide information about their largest positions and borrowings.

“Our goal is to increase the usefulness of the data collected. Ensure that [the hedge fund] provides 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 unduly burdensome. The requirement could cause significant operational challenges and costs without a compelling analysis under the Commodity Exchange Act (CEA),” she explained.

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

Recently, the US House of Representatives Agriculture Committee introduced a bill that would give the CFTC sole authority to regulate cryptocurrency transactions.