The SEC’s Division of Corporation Finance (CorpFin) released a sample letter illustrating comments that CorpFin staff might issue to companies about their direct and indirect exposure to the crypto asset market in light of recent bankruptcies and widespread disruption in those markets. CorpFin released the sample letter to help companies comply with their disclosure obligations under federal securities laws.
The sample letter begins with a general comment to companies regarding the disclosure of any significant crypto asset market developments that are material to an understanding of their business, financial condition, or share price.
Additionally, the letter includes a nonexhaustive list of sample comments requesting the following disclosures, to the extent material:
- Information included in the Description of Business section in a filing, such as
- Direct or indirect impacts as a result of (1) recent bankruptcies of crypto asset market participants, including any downstream effects, and (2) exposure to other counterparties, customers, custodians, or crypto asset market participants
- Steps taken to safeguard customers’ crypto assets and respective policies if material
- Information included in the Management’s Discussion and Analysis section, such as
- Excessive redemptions or withdrawals of crypto assets or suspensions of such activities, and their potential impact on a company’s financial condition and liquidity
- Financing arrangements collateralized by crypto assets that are issued or owned by the company or that are held on behalf of third parties, and whether the recent crypto asset market disruption has impacted the value of the underlying collateral
- Information included in the Risk Factors section, such as
- Direct or indirect risk due to excessive redemptions, withdrawals of crypto assets, or the suspensions of such activities
- Risk of reputational harm from the recent crypto asset market disruptions
- Risk of offering products and services to customers outside the authorized jurisdictions
- Risk of regulatory developments and the assertion of jurisdiction by U.S. and foreign regulators, both related to crypto assets and the crypto asset market
- Risk of safeguarding crypto assets
Further, in light of the crypto asset market disruptions, companies should consider disclosing, to the extent material, (1) gaps identified by the board or management related to risk management processes and policies as well as changes made to address these gaps, (2) impacts on the value of the collateralized crypto assets, and (3) other negative impacts, such as depreciation in stock price or the price volatility of crypto assets, among others.
Contacts:
Kendra Decker
National Managing Partner of Professional Practice, Audit Services
Partner, Audit Services, Grant Thornton LLP
Principal, Grant Thornton Advisors LLC
Kendra Decker is the national managing partner of Grant Thornton LLP’s Professional Practice within the firm’s Audit Quality and Risk group.
Arlington, VA
Service Experience
- Audit & Assurance
Rohit Elhance
Partner-in-charge, SEC Regulatory Matters; Audit Quality and Risk
Partner, Audit Services, Grant Thornton LLP
Principal, Grant Thornton Advisors LLC
Rohit Elhance is a partner in SEC Regulatory Matters group, with more than 17 years of international experience serving large multinational and entrepreneurial companies in the areas of audit, risk advisory and transaction services.
Washington DC, Washington DC
Industries
- Construction & real estate
- Manufacturing, Transportation & Distribution
- Technology, media & telecommunications
- Energy
Service Experience
- Advisory
- Audit & Assurance
- Transaction advisory
Cindy Williams
Managing Director, SEC Regulatory Matters
Managing Director, Audit Services
Grant Thornton LLP
Cindy is a managing director in the firm’s SEC Regulatory Matters group, with more than 15 years of auditing, accounting, and SEC reporting experience. She began her career in 2006 in the audit practice where she served public and private companies, primarily in the manufacturing and healthcare industries.
Arlington, Virginia
Industries
- Manufacturing, Transportation & Distribution
- Construction & real estate
- Asset management
Service Experience
- Audit & Assurance
© 2022 Grant Thornton LLP, U.S. member firm of Grant Thornton International Ltd. All rights reserved.
This Grant Thornton LLP bulletin provides information and comments on current accounting issues and developments. It is not a comprehensive analysis of the subject matter covered and is not intended to provide accounting or other advice or guidance with respect to the matters addressed in the bulletin. All relevant facts and circumstances, including the pertinent authoritative literature, need to be considered to arrive at conclusions that comply with matters addressed in this bulletin. For additional information on topics covered in this bulletin, contact your Grant Thornton LLP professional.
More snapshots
No Results Found. Please search again using different keywords and/or filters.
Share with your network
Share