The SEC made the announcement on the priorities for the Division of Examinations on February 7th, and crypto is one of them. The Division has been publishing its examination priorities on an annual basis in order to give insights into the risk-based strategy that it takes.
The division reports that its examination program is still making progress and that it is still dedicated to increasing investor protection by conducting high-quality exams and keeping up with the most recent industry developments and new dangers to investors and the markets.
The division has said that it would undertake audits of broker-dealers and RIAs that are adopting developing financial technologies or using innovative techniques, including technological and online solutions, to satisfy compliance and marketing needs and to service investor accounts.
When reviewing registrants, auditors will look for evidence that the company complied with applicable standards of care when making recommendations, referrals, or offering investment advice; and consistently reviewed, updated, and expanded its compliance, disclosure, and risk management policies in relation to the offer, sale, recommendation, or advice about trading in cryptocurrency or cryptocurrency-related assets.
The disclosed priorities do not include all of the subject areas that the Division will be concentrating on in its inspections, risk warnings, and outreach activities. Analyses of an entity’s history, activities, services, goods sold, and other risk factors are included in the scope of any investigation, said the SEC.
SEC chair Gary Gensler has said:
“In a time of growing markets, evolving technologies, and new forms of risk, our Division of Examinations continues to protect investors. In executing against the 2023 priorities, the Division will help ensure compliance with the federal securities laws and rules.”
