SEC to step up scrutiny of companies offering or giving advice on crypto

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Crypto brokers and investment advisers offering or giving advice on cryptocurrencies will come under the scrutiny of the securities watchdog in the United States this year.

A Feb. 7 statement from the Securities and Exchange Commission’s (SEC) examination division outlined its priorities for 2023, suggesting that brokers and advisers dealing with crypto will need to be very careful when offering, selling, or trading. recommendations regarding digital assets.

He said SEC-registered brokers and advisers will be closely monitored to see if they followed their “respective standards of care” when providing investment recommendations, referrals and advice.

Today we announced the 2023 Examinations Division Priorities. The Division releases its Examination Priorities annually to provide insight into its risk-based approach.

For more:

— US Securities and Exchange Commission (@SECGov) February 7, 2023

The SEC will also review whether these entities “regularly” review and update their procedures to ensure they follow “compliance, disclosure, and risk management practices.”

This announcement was similar to the priorities of the SEC published in 2022, however, it seems that this year the regulator is placing more emphasis on the standards of care and practices of brokers rather than their consideration of the unique risks presented by the “emerging financial technologies” highlighted in 2022.

The most recent statement comes nearly two weeks after a report claimed the SEC was investigating registered investment advisers that may offer custody of digital assets to clients without the required qualifications.

Related: SEC Leaked Personal Information Of Crypto Miners During Investigation: Report

The SEC investigation would have lasted several months, but is now high on the priority list after the collapse of crypto exchange FTX, according to a Reuters report.

By law, investment advisers must be qualified to offer custodial services to clients and comply with the custodial safeguards set out in the Investment Advisers Act 1940.

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