Summary:
- The U.S. SEC could launch a new policy for hedge funds as crypto adoption grows.
- Hedge funds might soon be required to report on their exposure to cryptocurrencies.
- Such firms would do so through the so-called Form PF.
- Gary Gensler said the move could provide more insight into the operations of large hedge funds and their interaction with the financial industry.
- The news also comes a few days after BlackRock announced Bitcoin trading for institutional investors through Coinbase.
- Gensler’s agency could also consider the move as part of a wider strategy to establish a firmer grip on the digital asset market.
Hedge funds in the United States could be required to report on their exposure to cryptocurrencies as the Securities and Exchange Commission moves toward exercising more regulatory oversight on the crypto industry.
WallStreetJournal reported on Wednesday that the financial watchdog is currently mulling over the policy in conjunction with the Commodity Futures Trading Commission (CFTC).
A decision to advance the policy would mean that large hedge funds with over $500 million in net assets must disclose their crypto exposure through a specialized filing called Form PF.
Form PF is a confidential filing that informs regulators of potential risks that might exist within private funds. The form was created shortly after the financial meltdown of 2008.
According to the report, the SEC’s consideration to expand Form PF’s purview could complement growing concerns from the agency over crypto’s growing integration with the financial system.
Gathering such information would help the Commissions and financial-stability regulators better observe how large hedge funds interconnect with the broader financial services industry.
– SEC Chairman Gary Gensler, WSJ.
SEC Shines Regulatory Spotlight On Crypto
The SEC has supposedly displayed more aggression towards cryptocurrencies in recent times. Cryptos have seemingly experienced a turbulent time over 2022 with notable crashes including Terra, Three Arrows Capital, and a massive slump in crypto asset prices.
Indeed, these events have evolved into a lightning rod for regulators who consider tighter crypto regulatory policies a priority. At press time, the agency has a plethora of ongoing probes into crypto companies including the likes of Binance, Coinbase, and Ripple to name a few.
The SEC’s possible hedge fund policy also comes shortly after BlackRock, one of the world’s largest asset managers announced Bitcoin trading for Aladdin institutional customers through Coinbase Prime.
