The United States Securities and Exchange Commission (SEC) has requested companies to disclose any material exposures to bankruptcies or the crypto-asset sector more generally. This follows the FTX cryptocurrency exchange bankruptcy and other failures this year.
By using the term ‘material’, the SEC is only asking companies to disclose items that might impact their balance sheet or profitability to the tune of 10% or more. However, it also wants to see disclosures about crypto-assets used as collateral for loans because it’s likely that additional collateral may have been requested and the value of the collateral will have declined.
While it might be straightforward to determine whether a company is exposed to one of the bankrupt crypto firms, some of the SEC considerations might be more challenging.
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