Hedge or private equity funds registered with the SEC are required to complete a document called Form PF. This allows them to communicate their basic information to the regulator so that he can examine the potential risks. In August 2022, the SEC proposed changes to Form PF. The proposed amendment contained a definition of digital assets. On May 3, the US regulator published the changes it made to the PF form. However, these did not contain the definition on digital assets proposed about 9 months ago. Here’s why.
The US regulator gives up on defining cryptos
In August 2022, the Securities and Exchange Commission (SEC) signaled its intention to first define digital assets in its rules. Now the regulator is announcing that it has waived defining that term in the new hedge fund rules. The US regulator revealed that this is because it continues to review the term in question.
In this context, the SEC will not publish, for the moment, any definition on digital assets. She bluntly stated:We have proposed adding “digital assets” as a new term to the Form PF glossary. The Commission and its staff are continuing to review this term and are not adopting “digital assets” under this rule at this time.“.
Last August, the SEC said that a fund’s crypto information would end up in a category “other“. She added that this situation involved “less robust PF form data for analysis“.
This is how the SEC had defined cryptos
According to the SEC’s August 2022 proposal, a digital asset is issued or transferred using blockchain technology. The definition of the term contained other phrases commonly used in the crypto industry. These include, in particular,virtual currencies” and of “tokens“.
The definition had been proposed in order to obtain more accurate reports on the new asset class. “We believe it is important to collect information about funds’ exposure to digital assets to better understand their overall market exposure“, had underlined the SEC.
SEC Chairman Gary Gensler continues to argue that cryptos are securities. In this context, he believes that the new asset class falls within the remit of his committee.
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