SEC Asks Public Companies for More Information About Crypto Exposure

The information-gathering exercise comes as regulators are scrambling to understand the fallout from the sudden implosion last month of FTX, until recently one of the largest crypto exchanges. FTX’s subsequent bankruptcy has revealed a web of creditors, many of whom haven’t been publicly identified.

Some of the SEC’s queries focused on counterparty risk that public companies may have to crypto-market participants that have filed for bankruptcy, faced heavy redemptions or suspended withdrawals from customers.

“We note that you own or have issued crypto assets and/or hold crypto assets on behalf of third parties,” one of the sample questions said. “Explain whether these crypto assets serve as collateral for any loan, margin, rehypothecation or other similar activities to which you or your affiliates are a party.”

The SEC did not mention any specific firms in the notice. Agency staff expect the companies receiving the queries to number in the dozens.

Many public companies have little or no exposure to cryptocurrencies, which have remained largely shut out of the traditional financial system.

But a handful have built—or redesigned—their businesses around the asset class. They include trading platform

Coinbase Global Inc.,

bitcoin miner

Marathon Digital Holdings Inc.

and and crypto-focused bank

Silvergate Capital Corp.

Write to Paul Kiernan at [email protected]