The United States Securities and Exchange Commission, or SEC, and the Commodity Futures Trading Commission, or CFTC, have proposed requiring large advisors to certain hedge funds to report any exposure to digital assets.
In a notice on Wednesday, The SEC and CFTC have proposed to modify their confidential information form for certain investment advisers of private funds of at least $500 million. The PR form would require eligible hedge funds not to include cryptocurrency exposure when reporting “cash and cash equivalents,” but instead add them under a different category “for reporting digital asset strategies with precision.”
The two US financial regulators cited the growth of the hedge fund sector as the reason for the proposed change, due in part to investments in digital assets becoming more common since the PR form was introduced in 2008.. According to the SEC and CFTC, having investment advisers provide more detailed information about strategies and exposure to certain assets would allow the Financial Stability Oversight Board to better assess potential risks to the US economy.
“In the decade since the SEC and CFTC jointly adopted the PF form, regulators have gained vital insights regarding private funds”SEC Chairman Gary Gensler said. “Since then, however, the private fund industry has grown in gross asset value by almost 150 percent and has evolved in terms of its business practices, complexity […] If adopted, [esta propuesta] It would improve the quality of information we receive from all PF filers, with particular attention to large hedge fund advisors.”
Our Commission will be meeting shortly to consider proposed changes to Form PF to amend reporting requirements for all filers and large hedge fund advisers.
Tune in to the livestream of our meeting at 10am ET: https://t.co/RhiOji1iyR
— US Securities and Exchange Commission (@SECGov) August 10, 2022
Our Commission will meet shortly to consider proposed changes to Form PF to modify the reporting requirements for all filers and large hedge fund advisers.
Tune in to the live broadcast of our meeting at 10 a.m.
A fact sheet on the proposal published on Wednesday showed that the number of private funds has increased by about 55% between 2008 and the third quarter of 2021. According to data from the market research company IBISWorld, in 2022 there were 3,841 hedge funds. based in the United States.
PricewaterhouseCoopers reported in June that roughly a third of traditional hedge funds it surveyed globally were invested in cryptocurrencies, but more than half had less than 1% exposure to digital assets of their total assets under management. According to the company, respondents cited “regulatory and tax uncertainty” as the biggest obstacle to investing in cryptocurrencies.
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