Cryptocurrency exchanges

Class customers’ digital tokens as debt, SEC tells cryptocurrency exchanges

WASHINGTON — Publicly traded cryptocurrency exchanges would have to report their customers’ digital tokens as liabilities on their balance sheets under guidance released on 31 March by the Securities and Exchange Commission.

The guidelines are designed to introduce consistency to the way crypto-trading platforms account for their holdings of assets like bitcoin on behalf of customers, SEC officials said.

While cryptocurrencies enable people to transact with each other directly using digital wallets, most investors access the market through trading platforms like Coinbase Global or FTX. In such cases, those platforms typically hold customer cryptocurrencies in the companies’ wallets.

READ Bitstamp boss urges ‘know-your-transaction’ crypto rules as Russia sanctions mount

“The obligations associated with these arrangements involve unique risks and uncertainties not present in arrangements to safeguard assets that are not crypto-assets, including technological, legal, and regulatory risks and uncertainties,” SEC staff wrote. “These risks can have a significant impact on the entity’s operations and financial condition.”

Write to Paul Kiernan at paul.kiernan@wsj.com

This article was published by Dow Jones Newswires

Source: https://www.coinhighlight.com/2022/03/class-customers-digital-tokens-as-debt-sec-tells-cryptocurrency-exchanges/

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