Crypto companies have received a special rating from the SEC. This recommends that they disclose any potential effects of the upheaval in the cryptocurrency markets. In reality, many businesses are suffering from the current chaos in this industry. This is why the SEC warns publicly traded companies.
A way to protect businesses and markets
According to Division of Corporate Finance (DCF) from the SEC, recent bankruptcy filings and financial turmoil among crypto-asset market participants have significantly disrupted markets. As a result, federal securities rules have full authority over the situation. They can require companies to disclose the direct or indirect effects that these events and related facts may have on their activities.
Among the examples of questions included in this letter addressed to companies, two can be cited. First, there is whether they face dangers to their business due to excessive withdrawals or redemptions. Then, they are asked to notify if they are victims of difficulties related to withdrawals or redemptions of cryptoassets.
A tough fight for the SEC
The DCF is the disclosure division of the SEC. She advises corporate issuers on how to properly alert investors to material risks to their businesses.
Furthermore, the SEC as a whole is at an impasse when it comes to much of the cryptocurrency industry. While she insists that many digital asset platforms be registered exchanges, they find arguments not to. Indeed, many of these companies claim that they are not engaged in the securities industry. Others, on the other hand, believe that the agency does not have real-time crypto securities.
In sum, there have been a number of high-profile failures and bankruptcies in the cryptocurrency industry lately. FTX and a number of lenders admitted that they owed hundreds of customers millions of dollars in cryptocurrencies. This situation, far from helping matters, rather drove home the point in a market already in dire straits.
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