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Companies are asked by the SEC to disclose their exposure to struggling crypto firms

The SEC has requested that publicly listed corporations disclose to their shareholders their relationship with any failing cryptocurrency startups. The SEC issued a warning on Thursday stating that corporations may be required by federal law to reveal whether or not their operations or finances have been affected by the recent volatility in the crypto market.

The Division of Corporation Finance at the SEC, which is responsible for making sure corporations provide investors all the information they need, released the recommendations. Even while it doesn’t impose any new disclosure rules outright, the regulator’s increased scrutiny of cryptocurrencies is reflected in this collection of suggestions.

The SEC suggests in its example letter that businesses disclose whether or not they have been harmed by crypto firms that have gone bankrupt, temporarily halted withdrawals, or had an unusually high volume of withdrawals. Additionally, it requests that businesses detail their efforts to keep clients’ cryptocurrency safe and address any “reputational harm” they may have had as a result of the crypto market’s volatility.

Following the collapse of FTX last month, Senator Elizabeth Warren (D-MA) called on the SEC to “suit up,” noting that the agency has “fallen far behind” in its efforts to crack down on crypto fraud. Chairman of the Securities and Exchange Commission Gary Gensler defended the agency’s activities in an interview with Yahoo Finance on Wednesday, saying that the SEC is “already dressed up” and has initiated 100 enforcement actions against crypto businesses.