SEC And CFTC Request Public Comments On Crypto Reporting For Hedge Funds

The U.S. Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) opened public consultations on a draft rule to identify cryptocurrency hedge funds and their public disclosures on Thursday.

As the commission moves to consider proposed amendments for Form PF, a confidential reporting form revealing business day events for SEC-registered investment advisers to Private Funds and Certain Commodity Pool Operators and Commodity Trading Advisors, the comment document for the general public was made available on the Federal Registry site. It aims to gather opinions from large hedge fund advisors and all filers about their investment strategies.

”We also are soliciting comment on the proposed rules and a number of alternatives, including whether certain possible changes to the proposal should apply to Form ADV” SEC and CFTC announced in a statement.

SEC amendments aim to increase the oversight of hedge funds

The SEC plans to strengthen private equity and cryptocurrency hedge fund disclosures under the proposed revisions to Form PF or regulation, as well as step up industry oversight to reduce potential risks.

“The amendments are designed to enhance the Financial Stability Oversight Council’s (“FSOC’s”) ability to monitor systemic risk as well as bolster the SEC’s regulatory oversight of private fund advisers and investor protection efforts” the statement read.

The Investment Advisers Act of 1940 will be amended by the regulators to remove the requirement for “temporary hardship exemption.”

Part of the announcement stated, “The proposal would define the term ‘digital asset’ and introduce a new sub-asset class for digital assets”.

Gary Gensler, the chair of the SEC, told reporters last month that the proposed reforms, which would require the biggest financial corporations to disclose their intricate organizational structures, would enhance transparency.

The proposed review will be the most thorough in 10 years

According to observers, if the revisions for confidential filings are accepted as suggested, they would grow to be one of the most significant regulations that oversee pooled investment fund trading in liquid assets in more than ten years.

The market turmoil caused by the deleveraging of hedge funds in March 2020 and the “meme-stock” saga, which involved unclear assets, prompted the Biden administration to ask regulators to erect a wall on unclear private funds that have a negative impact on the markets, marked the beginning of regulatory scrutiny.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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