Despite proposing a definition of the phrase around nine months ago, the SEC and its staff are “continuing to consider” it.

Despite having proposed it almost nine months ago, the U.S. securities commission is delaying the approval of the definition of “digital assets” in the regulations governing reporting disclosures for hedge and private equity funds.

The Securities and Exchange Commission updated Form P.F. on May 3. This form is used by SEC-registered funds to provide the SEC with basic fund information so that the regulator may evaluate any possible “systemic risks.”

The SEC first proposed the modifications in an August 2022 proposal that included a description of digital assets. If it had been implemented, it would have been the first time the SEC has defined “digital assets.”

Today, the regulator announced that it would not add the definition, at least not immediately.

“We proposed adding ‘digital assets’ as a new term to the Form PF Glossary of Terms. The Commission and staff are continuing to consider this term and are not adopting ‘digital assets’ as part of this rule at this time.”

The SEC’s definition of digital assets included phrases like “virtual currencies,” “coins,” and “tokens,” as well as an item “that is issued and/or transferred using distributed ledger or blockchain technology.”

Today the SEC finalized their new Form PF rules. The proposal included the 1st definition of “digital assets” in a rule. It is interesting that the SEC choose to NOT adopt the definition in their final rule. https://t.co/5y1UXbJqBd

— Anne Kelley (@amk_dc) May 3, 2023

The SEC stated in its proposal from August that the existing reporting of information about a fund’s digital assets under the “other” category leads to “less robust Form P.F. data for analysis.”

It developed the term to acquire distinct reporting on these assets and, consequently, more accurate reporting.

“We believe it is important to collect information on funds’ exposures to digital assets in order to understand better their overall market exposures.”

But as a likely response to the U.S. banking crisis, the most recent revisions to the SEC’s Form P.F. rules now demand, along with other new requirements, that SEC-registered funds report the occurrence of significant events that could signal systemic risk or harm to investors.

As the SEC attempts to shed light on the multi-trillion dollar industry, companies must also disclose specifics of their fees and expenses.

The SEC hasn’t always avoided defining terms linked to cryptocurrencies; in mid-April, it declared that it would review its definition of an “exchange” and may add decentralized finance (DeFi).