U.S.-Listed Crypto Firms Will Need to Report Cybersecurity Breaches

Companies are poised to begin reporting cybersecurity incidents and strategies to the SEC later this year.

AccessTimeIconJul 28, 2023 at 7:22 a.m. UTC
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The Securities and Exchange Commission (SEC) ordered listed companies, including crypto firms, to publish annual reports on their "cybersecurity risk management, strategy, and governance."

The new rule requires companies to disclose any "material" cybersecurity incidents within four business days in a bid to deepen trust between investors and public companies. Companies must detail how the cyberattack would impact their business, along with a report detailing the incident and the timing.

It remains unclear how companies will determine which security breaches have a potential financial impact. The SEC did not immediately reply to CoinDesk's request for further clarification.

“Whether a company loses a factory in a fire —  millions of files in a cybersecurity incident — it may be material to investors,” said SEC Chair Gary Gensler.

Most listed companies already include cybersecurity risks in their investor documents, but, until now, the SEC did not mandate any disclosures from them. Public companies and foreign private issuers must also must describe how their board oversees cybersecurity risks and detail "management’s role and expertise in assessing and managing material risks from cybersecurity threats."

The new requirement will become effective 30 to 180 days after the publication of the new financial release in the Federal Register. Smaller companies will have the full 180 days to begin filing their disclosures.

Registrants can petition to postpone disclosures if the U.S. Attorney General determines that an immediate disclosure of cybersecurity threats would "pose a substantial risk to national security or public safety."

Hacks have been known to have devastating effects on companies' stocks. In February, Coinbase (COIN) revealed it had been compromised in an attack last year that also targeted tech behemoths like Cloudflare and DoorDash, sending its stock tumbling.

Edited by Parikshit Mishra.


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Elizabeth Napolitano

Elizabeth Napolitano is a news reporter at CoinDesk.

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