US regulators are considering requiring hedge funds to disclose their exposure to cryptocurrencies. wall street journal report August 10.
The Commodity Futures Trading Commission (CFTC) and Securities and Exchange Commission (SEC) may issue a joint proposal requiring large hedge funds to report their crypto investments using Form PF.
The form will give regulators insight into the level of exposure hedge funds have to digital assets. It can also measure the impact of the crash on the economy as a whole.
Form PF was born after the 2008 financial crisis. This is intended to help regulators identify potential risks to bubbles and economic stability. The form was necessary given that most hedge fund operations are usually confidential.
Federal agencies use forms to collect data for publication as aggregate statistics about the industry.
SEC Chairman Gary Gensler said:
“Collecting such information would be [financial-stability regulators] We encourage you to observe how large hedge funds are interconnected with the broader financial services industry. “
Under the new proposal, hedge funds with more than $500 million in net worth will be required to report their cryptocurrency exposures, borrowing arrangements, and portfolio concentrations.
The plan to include cryptocurrency data on Form PF comes at a time of growing concern over market contagion amid the recent sharp decline in the value of cryptocurrencies.
It also indicates that the SEC and CFTC are concerned about the impact of cryptocurrencies on other assets as more traditional financial institutions gain exposure to this asset class.
The move is not surprising given the recent devaluation of cryptocurrencies, from around $3 trillion to less than $1 trillion in a few months.
Multiple stakeholders, including the International Monetary Fund, are debating what impact the global economy could have on increased adoption of cryptocurrencies by traditional financial institutions if they crash. increase.
Nevertheless, institutional investors are still drawn to the industry, as seen in a new partnership involving Coinbase and BlackRock, the world’s largest asset manager.
