SEC steps back from defining digital assets in new hedge fund rules


The United States securities regulator is holding off on ratifying a definition of the term “digital asset” in the rules governing reporting disclosures for hedge and private equity funds, despite proposing to do so some nine months ago.

Securities and Exchange Commission (SEC) on May 3 published Amendments to Form PF – a form that SEC-registered funds complete to disclose basic information about their funds so that regulators can assess potential “systemic risks.”

SEC originally included definition of a digital asset in August 2022 Proposal for changes. If it goes into effect, it would be the first time the SEC has defined a “digital asset”.

Fast forward to today and the regulator says it is not moving forward with adding the definition, at least for now.

“We have proposed adding ‘digital assets’ as a new term to the Form PF Glossary of Terms. The Commission and Staff are considering the term and at this time include ‘digital assets’ as part of this rule.” Not adopting.”

The SEC’s definition for digital asset was an asset “that is issued and/or transferred using distributed ledger or blockchain technology” and includes other commonly used terms such as “virtual currency,” “coins,” and “tokens.” The words used are included.

Currently, information about a fund’s digital assets is reported in the “other” category and results in a “less robust form PF data for analysis,” the SEC said in its August proposal.

It proposed separate, and in detail, definitions on such assets to achieve more accurate reporting.

“We believe it is important to collect information on the risk of funds being exposed to digital assets in order to better understand their overall market risk.”

However, the latest update to the SEC’s Form PF rules now requires — among other new requirements — that SEC-registered funds report the occurrence of major events that could indicate systemic risk or harm to investors in a possible reaction. american banking crisis,

Connected: SEC’s War on Crypto: How Far Will It Go?

The firms must also reveal details of their fees and expenses as the SEC tries to shed light on the multi-trillion dollar field.

Announcing in mid-April that the SEC hasn’t always shied away from crypto-related definitions look at the definition again An “exchange” probably includes decentralized finance (DeFi).

SEC Chairman Gary Gensler has also been vocal on his claim for a long time. cryptocurrencies are securities The US crypto sector is operating under their commission and against securities laws.

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