- The SEC has yet to define the term “digital assets” in disclosure reporting rules for hedge funds.
- The US regulator proposed a definition of digital assets in an August 2022 petition for revisions.
The U.S. Securities and Exchange Commission (SEC) has yet to ratify the definition of the term “digital assets” in the disclosure reporting rules for hedge and private equity funds. It was first proposed nine months ago.
SEC issued revisions on May 3 to document PF, a document SEC-listed funds use to file basic information about their fund so the regulator can investigate potential “systemic risks.”
The SEC earlier suggested a definition of digital assets in an August 2022 plan for the revisions. If it became law, it would be the first time the SEC defined “digital assets.”
But the regulator now says it will not add the definition, at least not for the time being.
The statement read as follows,
“We proposed adding ‘digital resources’ as a new term to the Form PF Glossary. The Commission and staff continue to consider this term and are not currently accepting ‘digital assets’ as part of this rule.”
SEC is strict on crypto but does not define it in words
The SEC’s initial definition for digital assets was an asset “issued and/or transferred using distributed ledger or blockchain technology” and included other commonly used terms such as “virtual currencies,” “coins,” and “token”.
The term has been proposed in order to achieve clear and therefore more accurate reporting on such assets.
Among other things, the most recent updates to the SEC’s Form PF rules now require funds registered with the SEC to report the occurrence of significant events that may indicate systemic risk or harm to investors in response to the US banking crisis.
The SEC has not always avoided crypto-related definitions. The regulator stated in mid-April that it would rethink its definition of “exchange” to potentially include decentralized finance (DeFi).
SEC Chairman Gary Gensler has long been vocal in his argument that cryptocurrencies are securities. He has also said that the US crypto sector poses a threat to the global financial system.