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SEC Officials Discuss Crypto and Climate Issues at Conference

S.J. Steinhardt
Published Date:
Dec 13, 2022

Securities and Exchange Commission (SEC) officials used the occasion of Monday’s AICPA & CIMA Conference on Current SEC and PCAOB Developments to expound upon some of the issues facing investors today,  including cryptocurrency and climate issues, Accounting Today reported.

"I think it's important for people to remember that the lessons of traditional finance apply in crypto," said SEC Commissioner Hester Peirce. "If you have entities that look very much like traditional financial entities, centralized entities, there are certainly basic rules that have been learned for centuries around how you manage a business and make sure that you are taking your accounting for things properly.”

Pierce also said that she is starting to see investors asking for more information about their assets, such as demands for proof of reserves, and questions about collateral and what is happening with their deposits. This could be a result of recent failures, such as those of crypto companies FTX and BlockFi.

“Those kinds of questions and that kind of skepticism is extremely helpful," she said, adding that that the SEC needs to “think about what good regulation might look like in this space.”

She said that the SEC “could also be doing a better job to create the environment within which good actors could experiment and try out some uses for this technology” in order to end up with a crypto industry that is more focused on thinking about "what can this technology bring us in the future," and less about "trading and numbers going up.”

SEC chief accountant Paul Munter said that he is also hearing demands from investors.

"Investors are asking for more disaggregation of information on the income statement, more disaggregation in terms of segment reporting, and the like," he said, adding that the Financial Accounting Standards Board (FASB) will be issuing an exposure draft next year on providing provide for greater information about the income tax provisions. The FASB is also working “toward a proposal on disaggregation of components of the income statement, cost of revenues, selling expenses, for example.”

Peirce also discussed climate-related disclosures. The SEC’s proposed rule to enhance and standardize climate-related disclosures has attracted thousands of comments and goes further than the Financial Stability Board's Taskforce on Climate-related Financial Disclosures (TCFD).

“Even when you look at something like TCFD, which many companies have been complying with in part, the question now is are you really going to be able to do this for real under an SEC regulatory obligation," she said. “You won't be able to pick and choose what's in the regulation you're going to have to comply with, so it's a new day when you start building these things into regulations.”

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