SEC Proposes Shift to Semiannual Reporting for Public Companies

The U.S. SEC proposes changes from quarterly to semiannual reporting for public companies, including those handling crypto assets.

The shift aims to cut compliance costs, sparking debates about transparency and liquidity in volatile crypto markets.

SEC Seeks Semiannual Reporting to Cut Compliance Costs

The U.S. Securities and Exchange Commission has proposed a shift to semiannual financial reporting for public companies. This move is supposedly aimed at fostering long-term planning and reducing compliance costs.

SEC Chair Paul Atkins champions the proposal, citing that “this proposal is about reducing compliance burdens and enabling businesses to focus on long-term growth rather than just quarterly performance metrics.” President Donald Trump is backing expedited rulemaking. The goal is to offer businesses greater flexibility and reduce the frequency of required financial disclosures.

Crypto Markets Vulnerable to Liquidity Challenges

This proposed reporting shift may lead to reduced liquidity and wider bid-ask spreads, especially affecting tradable assets like Bitcoin and Ethereum. These effects build on fears of increased information asymmetry in a less frequent reporting cycle.

Market participants are wary of transparency implications, particularly for crypto assets, where timely information is critical. Institutional investors might see freed capital, though at the cost of increased volatility.

Past Regulatory Shifts Warn of Transparency Risks

Historically, similar regulatory shifts, like in the Tel-Aviv Stock Exchange in 2017, have seen negative effects on transparency and asset values. European cases also correlated reduced reporting frequency with diminished firm value.

Based on these precedents, affected projects and equities may encounter enhanced market volatility and reduced confidence as a potential reflection of a rolling back of market transparency.