The staff of the SEC’s Division of Corporation Finance (Division) on December 8, 2022 released guidance for companies issuing securities in an illustrative letter, entitled “Sample Letter to Companies Regarding Recent Developments in Crypto Asset Markets” (Letter).1 The Letter provides a number of sample comments that the Division might issue to companies in connection with the staff’s review of certain filings under applicable securities laws. The comments included in the Letter focus on providing investors with specific, tailored disclosure regarding a company’s involvement with cryptocurrency and other digital assets, together with associated risk factors. This guidance comes on the heels of notable recent scandals and insolvencies in the cryptocurrency industry. SEC Chair Gary Gensler recently addressed cryptocurrency concerns in the wake of these events, calling on cryptocurrency companies to “come into compliance with the law.”2 The Letter discusses potential disclosure scenarios, and asks companies to detail how such scenarios may affect their operations.
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