CFTC and SEC approve new reporting requirement for crypto funds

The U.S. Commodity Futures Trading Commission (CFTC) approved a joint rule with SEC that will require hedge funds with AUM over $500 million to report on cryptocurrency-related risks.

The Initiative is an attempt to bolster FSOC’s ability to monitor systemic risks and strengthen broader regulatory oversight across agencies.

Crypto funds will inform regulators using the PF form, without disclosing information publicly. Structures are also required to provide details of their largest positions and borrowings.

“Our aim is to increase the usefulness of the collected data; to ensure that the hedge fund discloses risks as intended by Congress,” — said CFTC commissioner Christi Goldsmith Romero.

Her colleague Caroline Pham did not back the proposal. She expressed concerns that the proposed requirements could have unintended consequences for innovation.

“The initiative imposes excessively broad obligations that could be unduly burdensome. The rule could cause significant operational problems and costs without a compelling analysis in accordance with the Commodity Exchange Act (CEA),”, — said she.

Another commissioner — Summer Mersinger — stressed, that the proposal does not adequately account for the input from reporting entities. She also voted against it.

The CFTC will accept public comments on the proposed amendments.

Earlier reports, citing an aide to U.S. Senator Cynthia Lummis, reported a clash between the agencies over the mandate to supervise crypto firms.

The matter could have been intensified by an SEC suit against a former Coinbase employee and his co-conspirators over insider trading. The agency classified nine of the 25 cryptocurrencies used by the defendants in their operations as securities. The CFTC criticised the actions of its colleagues.

In July, a group of senators introduced the Digital Goods Consumer Protection Act. It would require firms offering trading of digital assets to register with the CFTC.

FTX founder Sam Bankman-Fried noted that the bill complements earlier initiatives by Cynthia Lummis and Kirsten Gillibrand, as well as Ro Khanna.

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