The U.S. SEC released its guidance on Thursday, requiring companies that issued securities to disclose their involvement with the cryptocurrency market in terms of risks and exposures.
The guidance came after SEC Chair Gary Gensler pushed back at U.S. lawmakers’ criticism, saying that the agency failed to enforce rules preventing cryptocurrency firms from unlawful acts such as using customer’s funds without consent.
The guidance by SEC aims to prevent potential losses like FTX from happening again. Cryptocurrency exchange FTX shook the digital asset markets after filing for bankruptcy last month. FTX loans customer funds without acquiring consent to a risky trading company, owned by FTX’s founder and at the time CEO Sam Bankman-Fried.
According to the bankruptcy filings by FTX, the firm wrote that it has over 1 million creditors. Over 100,000 customers were affected by the fall of FTX.
Under the new guidance, companies are required to include crypto asset holdings in their public filings, which will include their risk exposure to cryptocurrency markets.