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The U.S. Securities and Exchange Commission (SEC) has published its examination priorities for 2024 which include crypto monitoring and examinations. The securities regulator disclosed: “Examinations of registrants will focus on the offer, sale, recommendation of, advice regarding, trading in, and other activities in crypto assets or related products.”
Division of Examinations’ 2024 Priorities
The U.S. Securities and Exchange Commission (SEC) announced Monday that its Division of Examinations has published the “2024 examination priorities to inform investors and registrants of the key risks, examination topics, and priorities that the division plans to focus on in the upcoming year.” The securities regulator described: “This year’s examinations will prioritize areas that pose emerging risks to investors or the markets in addition to core and perennial risk areas.”
The SEC detailed:
Given the continued volatility of, and activity around, the crypto asset markets, the division will continue to monitor and, when appropriate, conduct examinations of registrants.
“Examinations of registrants will focus on the offer, sale, recommendation of, advice regarding, trading in, and other activities in crypto assets or related products,” the securities watchdog added.
The SEC explained that it will review whether registrants involved with crypto assets “meet and follow their respective standards of conduct when recommending or advising customers and clients regarding crypto assets.”
Moreover, the SEC stated that it will ensure that registrants “routinely review, update, and enhance” their compliance practices, risk disclosures, and operational resiliency practices, if any. The compliance practices include crypto wallet reviews, custody practices, Bank Secrecy Act (BSA) compliance reviews, and valuation procedures. Operational resiliency practices include data integrity and business continuity plans. The regulator added:
With respect to crypto assets that are funds or securities, the division will consider whether advisers are complying with the custody requirements under the Advisers Act (Rule 206(4)-2).
The SEC further noted that while the Division of Examinations “will allocate significant resources to the examination issues,” it will also conduct examinations targeting new or emerging risks, products, services, market events, and investor concerns.