US Securities Regulators have delayed approving a definition of the term "digital asset" in running reporting disclosures by hedge funds and prive eq. UITY FUNDS, Despite Proposing to do So About Nine Months Ago. form that SEC-registered funds fill out to disclose basic information about their funds so regulators can assess potential “systemic risk.”
The SEC originally included a digital asset definition in its August 2022 change proposal. If it goes into effect, it would be the first time the SEC has defined a "digital asset." Fast-forward to today, and the regulator says it will not continue to add definitions, at least not yet. "We propose to add 'digital asset' as a new term to the Form PF Glossary. The committee and staff are continuing to consider this term and do not currently adopt 'digital asset' as part of the rule."
The SEC's proposed definition of a digital asset is an asset "issued and/or transferred using distributed ledger or blockchain technology" and includes other common terms such as "virtual currency," "coin" and "token" . Currently, information about a fund's digital assets are reported in the “Other” category, which results in “unrobust Form PF data for analysis,” the SEC said in its August proposal.
It proposes definitions to obtain separate and more accurate reporting on such assets. “We believe it is important to collect information on a fund's exposure to digital assets in order to better understand its overall market exposure.” However, recent updates to the SEC's Form PF rules now require among other things that SEC-registered funds report reports that could indicate systemic risk or cause harm to investors in a possible response to a US banking crisis occurrence of key events. Companies must also disclose details of their fees and expenses s as the SEC tries to shed light on the multi-trillion dollar industry.
The SEC hasn't always shied away from crypto-related definitions, announcing in mid-April that it would revisit its definition of “exchange,” potentially including decentralized finance (DeFi).
SEC Chairman Gary Gensler has also long been outspoken in his claim that cryptocurrencies are securities within the purview of his committee and that the US crypto industry is acting in violation of securities laws.
