On December 8, 2022, the Division of Corporation Finance (the "Division") of the Securities and Exchange Commission ("SEC") issued a sample comment letter regarding issuers' crypto asset disclosures and urged issuers to evaluate their disclosures in view of recent volatility in crypto asset markets. Citing "[r]ecent bankruptcies and financial distress among crypto assets market participants," the Division's "Sample Letter to Companies Regarding Recent Developments in Crypto Asset Markets" contains a non-exhaustive list of comments that the Division may issue to companies as part of its selective review and monitoring of company filings.
The recent market disruptions and the Division's sample letter have added focus to the growing regulatory scrutiny of disclosures regarding exposure to crypto assets and related risks. Previously in March 2022, the Division staff and the staff of the SEC's Office of the Chief Accountant had issued Staff Accounting Bulletin No. 121,which provides disclosure guidance to companies who hold crypto assets for others. On December 22, 2022, SEC Chair Gary Gensler criticized so-called proof-of-reserves reports issued by some crypto firms because such reports are "neither a full accounting of the assets and liability of a company, nor [do they] satisfy segregation of customer funds under the securities laws."
SEC Staff Issues Disclosure Guidance to Public Companies Regarding Exposure to Crypto Assets.pdf (pdf | 127.18 KB )
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