>

SEC Issues New Guidance Requiring Companies to Disclose Cryptocurrency Risks

Staff Accounting Bulletin Addresses Investment Contracts, Safeguarding Obligations

Washington, December 8, 2022 –

The US Securities and Exchange Commission (SEC) has issued new guidance requiring public companies to assess whether they need to disclose any potential exposure to cryptocurrency risks to investors.

The SEC's guidance comes in the form of a Staff Accounting Bulletin (SAB) that provides interpretive guidance for entities with obligations to safeguard crypto assets. This article provides a short background on the current regulatory landscape for decentralized finance (DeFi) and the role of the United States Securities and Exchange Commission (SEC) in oversight.

The SEC's latest guidance is intended to help companies comply with their disclosure obligations under the federal securities laws. The SAB provides a framework for analyzing whether a digital asset has the characteristics of an investment contract, which would subject it to SEC registration and disclosure requirements.