Two important regulatory drafts closely related to cryptocurrency and financial markets in the US have been submitted to the White House for review. The two separate proposals, prepared by the US Securities and Exchange Commission (SEC) and covering reporting obligations for digital assets and hedge funds/private equity firms, are being considered as part of the official review process.
According to a statement published on a US government website, these regulations are being reviewed by the White House Office of Budget and Management (OMB). The drafts, submitted on March 20, were made public today.
SEC Chairman Paul Atkins shared details of a comprehensive regulatory plan for digital assets in a speech last week. According to this plan, the new regulation will include a long-awaited “innovation exemption” for crypto companies. This exemption will allow digital asset firms to operate for a certain period without registering as brokers, exchanges, or other regulated financial institutions.
On the other hand, the second amendment could pave the way for significant changes to Form PF, which hedge funds, private equity firms, and other private funds use to report performance and risk data. Atkins has previously stated that current reporting requirements place an “overburden” on investment managers and that he has instructed that work begin to reduce this burden.
In this context, the SEC also postponed the effective date of the new Form PF regulations introduced during the tenure of former chairman Gary Gensler. While it was announced that the new rules would not be implemented until October 1st, the changes made during Gensler’s time specifically included requests for additional data regarding large margin calls and counterparty risks following the collapse of Archegos Capital Management in 2021.
*This is not investment advice.