US SEC Lists Priorities for Crypto Examination in 2020
The Securities and Exchange Commission’s (SEC) has published a list of 2020 Examination Priorities via its Office of Compliance Inspections and Examinations (OCIE) which highlights digital assets and transfer agents as ongoing concerns for US retail investors.
The OCIE acknowledges the rapid growth of the digital assets market and stated that it, “presents various risks including for retail investors who may not adequately understand the differences between these assets and more traditional products.”
The document further highlighted specific areas of assessment during the OCIE’s ongoing examination of SEC-registered market participants as a result of the risk. IT will also continue to examine Registered Investment Advisers (RIA) that provide services to clients through automated investment tools and platforms, often referred to as “robo-advisers.”
The examinations will assess six areas: investment suitability; portfolio management and trading practices; safety of client funds and assets; pricing and valuation; effectiveness of compliance programs and controls; and, supervision of employees outside business activities.
According to the document, the OCIE further cited that within the digital assets sector, new methods of capital formation and market structures, as well as registered firms’ use of ‘alternative data’, are cause for ongoing attention and review.
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