Federal regulators are set to issue a proposal that would — among other things — require large hedge funds to reveal their cryptocurrency exposure.
The U.S. Securities and Exchange Commission (SEC) voted Wednesday (Aug. 10) to propose amendments to Form PF, a confidential reporting form.
“The amendments, which the Commodity Futures Trading Commission (CFTC) is concurrently considering to propose jointly with the SEC, are designed to enhance the Financial Stability Oversight Council’s (FSOC) ability to assess systemic risk as well as to bolster the SEC’s regulatory oversight of private fund advisers and its investor protection efforts in light of the growth of the private fund industry,” the SEC said in a news release.
Created after the 2008 financial crisis, Form PF gives regulators important information on the inner workings of private funds, offering a picture that helps the SEC assess risk.
“We now have almost a decade of experience analyzing the information collected on Form PF,” the commission said in its proposal.
Since then, the proposal said, the private fund industry has evolved and grown to include things like digital assets, which are much more common than when the form was created.
According to a statement from SEC Chair Gary Gensler, the amendments would expand reporting requirements for large hedge funds — those with at least $500 million in net asset value. It would cover those funds’ open positions and “certain large positions,” as well as their borrowing and financing arrangements.
The SEC’s proposal comes as the commission and the CFTC are battling for control of crypto oversight, as PYMNTS reported last week following the announcement of a new bill that would give the CFTC regulatory powers over the two largest cryptocurrencies, bitcoin and ether.
The bill would give the CFTC the authority to regulate the spot markets for digital commodities, a new asset class. The commission already oversees the market for crypto derivatives such as futures and swaps.
In addition, the bill specifically excludes transactions in which a cryptocurrency is solely used to pay for goods or services.