The Securities and Exchange Commission (SEC) has listed crypto assets as a priority screening for market participants this year. “At this time of extreme market volatility, our priorities are designed to focus on emerging issues, such as crypto assets,” said an official in the SEC Testing Division.
Crypto assets among the priorities of SEC examination
Examination Department of the Securities and Exchange Commission published Wednesday’s annual examination priorities. Crypto is among the top priorities highlighted in the report this year.
The Examination Division conducts the SEC’s National Examination Program, details its website, adding that “its mission is to protect investors, ensure market integrity, and support responsible capital formation through risk-focused strategies.”
SEC President Gary Gensler explained that the examination priorities identify key areas of risk that the Securities and Exchange Commission (SEC) expects of registrants — including investment advisors, brokers, dealers, self-regulatory organizations and clearing firms — to “address, manage, and mitigate vigilance.”
Richard Best, Acting Director of the Exams Division commented:
In this time of extreme market volatility, our priorities are designed to focus on emerging issues, such as crypto assets and expanding information security threats, as well as core issues that have been part of the SEC’s mission for decades – such as protecting retail investors.
The Screening Priorities Report lists five “important focus areas,” and “Emerging Technologies and Crypto Assets” is one of them. Others are retirement funds. Environmental, Social and Governance Investment (ESG); behaviours basics; Information security and operational flexibility.
Regarding crypto assets, the Securities and Exchange Commission explained that “the department will conduct tests for brokers, traders, and RIAs.” [registered investment advisors] that uses emerging financial technologies to review whether the unique risks posed by these activities have been taken into account by companies when designing their regulatory compliance programs. The Securities and Exchange Commission explained:
Tests of market participants involved in crypto assets will continue to review custodian arrangements for these assets and evaluate the offer, sale, recommendation, advice and trading of crypto assets.
In addition, the division will conduct tests on mutual funds and ETFs [exchange-traded funds] View exposure to crypto assets to assess, among other things, compliance, liquidity and operational controls around portfolio management and market risk,” the report details.
What do you think about the SEC’s naming of cryptocurrency as a test priority this year? Let us know in the comments section below.
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