CFTC and SEC open comments on proposed change to crypto reporting rules for large hedge funds

The public was invited to comment on whether regulators should use the term "crypto asset" instead of "digital asset" in the amendments proposed in the PF form.

The U.S. Securities and Exchange Commission, or SEC, and Commodity Futures Trading Commission, or CFTC, have called for comment on a proposal that would require large advisers to certain hedge funds to report their crypto exposure .

In a joint rule proposal published in the Federal Register on September 1, the SEC and the CFTC established a 40-day comment period for changes to Form PF, the confidential reporting document for certain investment advisers of private funds of at least $500. million. The proposal suggested that qualifying hedge funds report crypto exposure in a different category than "cash and cash equivalents", as the current iteration of the PR form does not specifically mention cryptocurrencies.

Members of the public have until October 11 to submit comments on the proposed changes, which the two regulators first introduced on August 10. At the time, the SEC and CFTC cited the growth of the hedge fund industry as the reason. for the proposed change, in part due to the fact that crypto investments have become more mainstream since the introduction of Form PF following the 2008 financial crisis.

Among the suggested changes to Form PF was a definition of "digital assets", potentially requiring some hedge funds to report income based on investments in "virtual currencies", "coins" or "tokens" depending on the setting. The public was asked to comment on whether regulators should use the term "crypto asset" instead of "digital asset".

“We consider these terms to be synonymous,” said the pro...