United States – The Securities and Exchange Commission advises a new regulation wherein companies are required to reveal the risks of cryptocurrency before starting the trade. The new regulation was out after SEC Chairman Gary Gensler backed the agency from statements that it failed to stop cryptocurrency firms from misusing customer funds.
SEC announced new guidance to require companies to provide a disclosure to investors about their risk and exposure in the crypto market. The regulation came after the collapse of FTX, which is a big crypto exchange in the world. The regulation was after FTX filed bankruptcy due to misusing funds of customers to a trading company. The CEO of FTX, Sam Bankman-Fried, founded the company, and he left more than 100,000 customers with a big problem after the failure of the company.
SEC chairman Gary Gensler secured accusations that the agency failed to stop digital asset firms from abusing the funds of customers. Gensler stated that SEC would take actions that are more effective if the companies fail to fulfill existing regulations.
Companies will have to incorporate cryptocurrency asset holdings under the new regulation, as well as risk disclosure to the bankruptcy of FTX and other market developments in their public filings. The bankruptcy filings of the company suggested that there are more than one million creditors.
The Division of Corporation Finance of the SEC created a sample letter after a discriminating review of findings under the Securities Act of 1933, and the SEC Act of 1934, which directs firms to reveal material information as it’s necessary to make up the required statements in light of the conditions which they are created, not mislead.
There was a suggested item within the letter that asks the issuer to explain how company insolvencies, along with subsequent effects, impacted the business, customers, financial condition, and counterparties, which is indirectly or directly.
The corporate funding division of the SEC helped companies to implement these proposals as they make documents that might be subject to evaluation by the Division before utilization.
On another note, Kazakhstan controlled cryptocurrency mining despite being one of the leading locations for mining. The lower house of parliament of this ex-Soviet country passed a regulation, which introduced a mandatory license and a tax for companies that are mining digital assets.
In the previous months, the country looked to encourage the expansion of digital asset mining while breaking down illicit crypto mining farms.
According to Yekaterina Smyshlyayeva, a lawmaker to introduce the regulation, the goal of the regulation is to remove illegal mining and establish a sufficient legal move for legit entrepreneurs. She also stated that the activity is a capital-intensive enterprise and there are high risks.