The Securities and Exchange Commission (SEC) has notified U.S.-listed companies to provide more details regarding any potential exposure to insolvent crypto companies.
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The FTX fiasco and its aftermath have endangered the survival of many smaller crypto firms, and billions of dollars of customers’ money invested in digital assets are at stake. The SEC seeks to get to the bottom of how the FTX collapse may have impacted other companies and the severity of the damage, either directly or indirectly.
Most importantly, companies are at higher risk from counterparty transactions, in which the said company may have owned, held, or issued crypto assets on behalf of third parties.
The SEC also posted a few sample questions that may be directed to certain crypto-related entities to gauge their exposure.
- “Clarify whether you have material assets that may not be recovered due to the bankruptcies or may otherwise be lost or misappropriated.”
- “Have experienced excessive redemptions or suspended redemptions or withdrawals of crypto assets.”
The SEC has not mentioned any specific firms in the notice, but crypto exchange Coinbase Global (NASDAQ:COIN), Bitcoin (BTC-USD) miner Marathon Digital (NASDAQ:MARA), and crypto bank Silvergate Capital (NYSE:SI) could come under the scope of the new disclosure requirements.
Crypto Exchanges Could Face Further Scrutiny
The SEC has been forcing crypto exchanges to register a few cryptocurrencies as securities. As such, these digital assets should come under the same rules as other stocks and bonds traded on the Nasdaq Stock Market (NASDAQ:NDAQ) and New York Stock Exchange (NYSE). However, crypto exchanges deny similarities in the trading/operations of these securities, allowing them to avoid abiding by the strict SEC regulations.
Coinbase Global has been on the SEC’s radar for several years, but the latter has failed to take any strict measures to bring Coinbase under its gambit. Looking at FTX’s sudden fallout, shareholders and analysts have grown skeptical of Coinbase’s future, and some even worry if COIN could be the next FTX.
With a fall in the crypto prices this year, the company’s financial condition is deteriorating, with revenue falling and losses widening drastically, over the quarters. Year to date, COIN stock has lost nearly 83%.
Is Coinbase Stock Expected to Go Up?
On TipRanks, the average Coinbase Global price forecast of $74.59 implies that the stock has a 74.2% potential of going up in the next twelve months. Also, analysts have a Moderate Buy consensus rating on COIN stock based on nine Buys, seven Holds, and three Sell ratings.
