Wednesday, January 8, 2022

US SEC Announces 2020 Examination Priorities: The Regulator to Continue Crypto Compliance But with Some Gentle Approach

The US Securities and Exchange Commission’s Office of Compliance Inspections and Examinations (OCIE) has announced its 2020 examination priorities saying that SEC would to continue to scrutinize crypto space in the country.

Office of Compliance Inspections and Examinations (OCIE) publishes its examination priorities every year to provide details of its examination program, including the areas that it believes present potential risks to investors and the integrity of the U.S. capital markets.

In press release published on January 7, SEC’s OCIE said that it would continue to examine its anti-money laundering (AML) programs and financial technology (Fintech) and innovation, including digital assets and electronic investment advice.

The OCIE, about Fintech and digital space, said:

OCIE recognizes that advancements in financial technologies, methods of capital formation and market structures, as well as registered firms’ use of new sources of data (often referred to as alternative data), warrant ongoing attention and review. OCIE also will continue to identify and examine SEC-registered firms engaged in the digital asset space, as well as RIAs that provide services to clients through automated investment tools and platforms, often referred to as robo-advisers.”

The above paragraph indicate a less hostile attitude as it said that SEC would continue to identify and examine digital asst space. But the examination priorities announced for 2019 was not so kind to crypto space as it stated:

OCIE will continue to monitor the offer and sale, trading, and management of digital assets, and where the products are securities, examine for regulatory compliance.”

Further examination priorities are retail investors Including seniors and those saving for retirement, market infrastructure, cyber and other information security, investment advisor, investment companies, broker dealers, municipal advisors, and activities of the Financial Industry Regulatory Authority (FINRA) and the Municipal Securities Rulemaking Board (MSRB).

OCIE further said that,

“The published priorities for FY 2020 are not exhaustive and will not be the only areas OCIE focuses on in its examinations, risk alerts, and investor and industry outreach.”

The SEC chairman Jay Clayton said:

OCIE’s 2020 examination priorities identify key areas of risk, both existing and emerging, that we expect self-regulatory organizations (SROs), clearing firms, investment advisers and other market participants to identify and mitigate. I applaud OCIE’s thoughtful, strategic and efficient focus, which is critical to the fulfilment of the SEC’s mission and our service to Main Street investors.”

2019 remained a busy year for the US regulator. There was lots of lawsuits and cases against the crypto firms. It was also criticized for taking so much time to issue broker-dealer licenses to offer crypto custody services. But what SEC and OCIE brings to crypto space in 202, only the end of this decade will decide.

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