- SEC Scraps Proposed “Digital Assets” Definition from Final Form PF Rules
- SEC to consider the term “digital assets” following its removal from Form PF rules
In the final hedge fund reporting rules document, the US Securities and Exchange Commission (SEC) removed its proposed definition of “digital assets” from the Form PF Glossary of Terms. The SEC stated that it is still considering the term, but it will not be included in the rules for now.
The Form PF rules apply to investment advisers who manage private funds with a certain amount of assets. These advisers need to regularly provide detailed information to the SEC about their funds, including the types of assets held, leverage used, and counterparty credit risk. The rules aim to help the SEC monitor potential risks to the financial system that may be posed by large private funds.
The SEC had initially included the proposed definition of digital assets Last year, the SEC included a definition of “digital assets” in its draft hedge fund reporting rules, but has now removed it. The proposed definition described digital assets as assets that are issued or transferred using distributed ledger or blockchain technology, such as virtual currencies, coins, and tokens.
SEC removes ‘digital assets’ definition from hedge fund rules
If the SEC had included the definition of digital assets in the rules, it would have been the first time they officially stated what digital assets are. Notably, last month, the SEC said it would revisit its definition of an “exchange” to possibly include decentralized finance (DeFi).
The SEC Chairman Gary Gensler said that many crypto trading platforms are already considered exchanges and have to comply with securities laws. He added that these platforms are not free to choose whether to follow the laws or not.
The SEC, led by Gensler, has been taking legal action against crypto companies. The agency filed a lawsuit against Bittrex last month, The SEC accused the company of operating without proper registration as a national securities exchange, broker, and clearing agency. In March, the SEC issued Coinbase a Wells Notice, Coinbase, a cryptocurrency exchange, is facing scrutiny from the US SEC regarding its exchange, staking service, Coinbase Earn, and Coinbase Wallet.
Coinbase then sued the SEC. The company has taken legal action to compel the SEC to provide clear regulations for digital assets by filing a petition.
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