• The U.S. SEC has mandated stringent cybersecurity reporting for crypto firms in an effort to strengthen the relationship between investors and public corporations.
• Companies are required to report any “material” cybersecurity issues within four business days and must disclose management’s participation and competence in handling such risks.
• According to data from cybersecurity firm Chainalysis, 2022 was the worst year on record for crypto-related attacks, with hackers stealing $3.8 billion in cryptocurrencies.
U.S SEC Mandates Cybersecurity Reporting for Crypto Firms
The U.S Securities and Exchange Commission (SEC) has mandated that listed corporations, including crypto enterprises, report annually on their “cybersecurity risk management, strategy, and governance” in order to strengthen the relationship between investors and public corporations. This new requirement will go into effect between the next 30 and 180 days.
Requirements of Reporting
Organizations are obligated to disclose not just the occurrence and time of a cyberattack but also its potential effects. They need to figure out which security lapses might cost them money as these cybersecurity issues are considered material by investors according to SEC Chair Gary Gensler’s statement: “Whether a company loses a factory in a fire — millions of files in a cybersecurity incident — it may be material to investors.“ Furthermore, companies are required to report any “material” cybersecurity issues within four business days or petition if necessary with the approval from U.S Attorney General depending on national security or public safety concerns.
Management’s Competence & Participation
Not only must businesses inform investors about potential risks related to cyber security but they also have to disclose management’s participation and competence in evaluating those risks as well.
Cyber Attack Statistics
According to data from blockchain analytics firm Chainalysis , 2022 was the worst year on record for crypto-related attacks with hackers stealing $3.8 billion in cryptocurrencies, up from $3.3 billion in 2021 . This highlights how important it is for companies operating in the cryptocurrency space to have strong risk management protocols when it comes it comes down protecting their digital assets against malicious actors .
The addition of this new regulation could help provide further legitimacy for businesses operating within the cryptocurrency sector as well as reassure investors that their investments are secure across multiple fronts .