The SEC and CFTC Propose Amending Form PF to Include Cryptocurrencies

The US Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) voted in favor of amendements to Form Private Fund (Form PF), which is required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010).

Form PF was created following the 2008 financial crisis. It is confidential filing of assets under management to the Financial Stability Oversight Council. Private fund advisors (such as hedge funds) that have at least $150 million in fund assets must file the form.

Under the new amendments, hedge funds that have at least $500 million in assets must report their cryptocurrency exposure via Form PF. The report must also include borrowing and counterparty exposure, turnover, portfolio liquidity
Liquidity

The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash. The most liquid asset of all is cash itself. ·      In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. ·      Nothing is more liquid than cash, while other assets represent varying degrees of liquidity. This can be differentiated as market liquidity or accounting liquidity.·      Liquidity refers to a tangible construct that can be measures. The most common ways to do so include a current ratio, quick ratio, and cash ratio. What is the Definition of Liquidity? Liquidity is a common definition used in investing, banking, or the financial services space. Its primary function is to ascertain how quickly a given asset can be bought, sold, or exchanged without a disparity in market price.  Which of the following assets is the most liquid? By definition, in terms of liquidity, cash is unequivocally seen as the most liquid asset in an economic sense. This is due to its widespread acceptance and ease of conversion into other assets, forms of cash, or currencies, etc. All other liquid assets must be able to be quickly and efficiently converted into cash,…