The US Securities and Exchange Commission (SEC) published itsfor 2023 on February 7, in which he highlighted the need for greater attention to those who advise investors to participate in crypto projects without the proper accreditations.
Along with an initiative to ensure that registered investment advisers (RIAs) have “adopted and implemented written policies and procedures that are reasonably designed to prevent violations by advisers,” the SEC singled out crypto asset advisers specifically as an area center focus.
US Crypto Regulation
The SEC statement referenced the broader segment of “emerging financial technologies” in an “Emerging Technologies and Crypto Assets” section as a catch-all for the fast-moving blockchain industry.
“Examines broker-dealers and RIAs that use emerging financial technologies or employ new practices, including online and technology solutions to meet compliance and marketing demands and to service investor accounts.”
Regulatory bodies have struggled to adopt the right advice for crypto projects, in part due to the constantly moving target that results from continuous innovation in the space. From NFT to DeFi, correctit requires a clearly defined set of data points, use cases, and technology stacks to which the rules can be attributed.
One of the significant advances of thewas the inclusion of a clear set of definitions for blockchain-related terms. However, the US currently does not have such definitions, leading to frustration within the industry. For example, Nexo, a centralized exchange based in Bulgaria, recently that it would cease all operations in the US due to the lack of required regulatory oversight.
SEC Targets Crypto Advisors
However, the SEC’s statement clearly identified areas of crypto asset promotion that would be among its main focuses by 2023. For example, parties that are registered with the SEC to advise on crypto investments will be vetted based on their “standards of care.” “. ” and “risk management practices” along with other reviews and disclosures.
“Registrant examinations will focus on offering, selling, recommending, or advising on trading crypto or crypto-related assets and will include whether the company (1) met and followed their respective standards of care when making recommendations… and (2) periodically reviewed, updated, and improved their compliance, disclosure, and risk management practices.”
While not directly mentioned in the statement, the SEC appears to be strengthening its position in promoting crypto assets following the fallout from the FTX implosion.John Ray III and others involved in the FTX bankruptcy case have identified a inside the company.
Compliance disclosure and risk management practices were reviewed, updated, and poorly managed.within FTX, in addition to any criminal activity by its stakeholders. In addition, the “standards of care” provided to FTX customers could be scrutinized, given released from the collapse.
The SEC also revealed that the exams will be conducted annually and “begin with input from exam staff who are uniquely positioned to identify practices, products, services, and other factors that may pose risk to investors or financial markets.” .