CUBE RegNews:
12^th April

FASB issues consultation updating taxonomy for crypto assets

The Financial Accounting Standards Board (FASB) has proposed amendments to improve the accounting for, and disclosure of, certain crypto assets in response to stakeholder feedback, including from respondents to the 2021 FASB Invitation to Comment. Stakeholders indicated that the current accounting model for holdings of crypto assets as indefinite-lived intangible assets does not provide decision-useful information to investors because it only reflects decreases, not increases, in the value of the assets until they are sold. The proposed amendments aim to provide relevant information about the underlying economics of crypto assets and an entity’s financial position. Additionally, certain investors requested additional disclosures about the types of crypto assets held by entities and changes in those holdings.

The amendments in the proposed Update would apply to crypto assets that meet all of the following criteria: 

• Meet the definition of intangible asset as defined in the Codification Master Glossary
• Do not provide the asset holder with enforceable rights to, or claims on, underlying goods, services, or other assets
• Are created or reside on a distributed ledger based on blockchain technology
• Are secured through cryptography  
• Are fungible 
• Are not created or issued by the reporting entity or its related parties.

The deadline for comments is 6^th June. 

CFTC fraud charge

The Commodity Futures Trading Commission (CFTC) has filed a civil enforcement action against Rashawn Russell for fraudulently soliciting retail investors to invest in a digital asset trading fund and for misappropriating at least $1 million in investor assets. The CFTC is seeking restitution, disgorgement, civil monetary penalties, permanent trading and registration bans, and a permanent injunction against further violations of the Commodity Exchange Act (CEA) and CFTC regulations. Russell allegedly made false and misleading statements regarding the fund’s structure, size, and performance, traded little of the money and digital assets as represented, and falsely promised to pay withdrawal requests. At least $1 million in investor assets are alleged to have been misappropriated by Russell, and used to pay personal expenses, entities associated with gambling activities, and Ponzi-like payments to current investors. 

FCA to lead greenwashing techsprint

The Financial Conduct Authority (FCA) will be among 13 international regulators taking part in the Global Financial Innovation Network (GFIN)’s first ever Greenwashing TechSprint. Firms interested in participating, need to apply to apply from 17 April 2023.

The GFIN is a group of more than 80 international organizations committed to supporting financial innovation in the interest of consumers. The FCA currently chair the GFIN’s Co-ordination Group, which sets the overall direction, strategy and annual work program.

The number of investment products marketed as ‘green’ or making wider sustainability claims is growing. Exaggerated, misleading or unsubstantiated claims about Environmental Social and Governance (ESG) credentials damage confidence in these products and the FCA wants to ensure that consumers and firms can trust that products have the sustainability characteristics they claim to have.  

The FCA and the GFIN will therefore be launching a virtual TechSprint, hosted on the FCA’s Digital Sandbox, to bring together international regulators, firms and innovators to address sustainable finance as a collective priority. 

The objective of the TechSprint is to develop a tool or solution that can help regulators and the market effectively tackle the risks of greenwashing in financial services.