• The U.S. Securities and Exchange Commission (SEC) has issued its annual examination priorities, which includes extra scrutiny of crypto-related activities by broker-dealers and investment advisers.
• SEC examiners will focus on whether these firms are following their respective standards of care when making recommendations, referrals or providing investment advice related to cryptocurrencies.
• SEC Chair Gary Gensler stated that these priorities aim to protect investors in a time of growing markets, evolving technologies and new forms of risk.
U.S. SEC Announces 2021 Examination Priorites
The U.S. Securities and Exchange Commission (SEC) has announced its annual examination priorities for the upcoming year, which includes extra scrutiny of crypto-related activities by broker-dealers and investment advisers. According to a statement released Tuesday, SEC examiners will focus on whether these firms are following their respective standards of care when making recommendations, referrals or providing investment advice related to cryptocurrencies.
Aimed at Protecting Investors
SEC Chair Gary Gensler commented that the regulator’s priority is to protect investors in a time of growing markets, evolving technologies and new forms of risk posed by digital assets such as cryptocurrencies. He said that these examination objectives “look back at past activity” in order to ensure proper handling practices were followed by firms offering or advising about cryptocurrency investments services.
Focus on Crypto Custody Arrangements
The SEC’s annual priorities differ from last year’s which included a brief section on crypto with a specific focus on custody arrangements for digital assets held by registered investment advisors or other institutional investors looking to add cryptocurrency exposure into their portfolios. It was reported earlier this week that some registered investment advisors have recently been under increased scrutiny from the SEC regarding their compliance with such custody rules for crypto holdings within retirement accounts owned by individual investors .
Warning About Crypto Investments
Additionally, the agency issued a warning urging investors who may be considering adding cryptocurrency into self-administered retirement accounts to be cautious as they may not receive sufficient protection if something goes wrong with their investments due to lack of oversight in this area compared to traditional securities markets .
It is clear that the SEC is taking proactive steps towards ensuring investor protection amidst rapid growth in markets like cryptocurrency where there may be additional risks associated with participating compared to more established asset classes such as stocks or bonds . With its latest announcement regarding 2021 examination priorities , it appears that the regulator is committed to keeping an eye on how US broker-dealers are pitching crypto assets so that investors can make informed decisions before investing any money into digital assets .