The U.S. Securities and Exchange Commission (SEC) has released its list of priority study areas for 2024, which includes monitoring and auditing of the cryptocurrency market. The disclosure made by the securities regulator stated that "examinations of registrants will focus on the offer, sale, recommendation of, advice regarding, trading in, and other activities in crypto assets or related products."
Priorities for the Division of Examinations in 2024
In a statement released on Monday, the U.S. Securities and Exchange Commission (SEC) stated 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." According to the securities regulator, "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 explained:
The division will continue to monitor registrants and, where necessary, conduct examinations given the ongoing volatility of the activity around the markets for crypto assets.
"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 regulator noted.
According to the SEC, it will examine whether registrants that deal in crypto assets "meet and follow their respective standards of conduct when recommending or advising customers and clients regarding crypto assets."
The SEC also said it would make sure registrants "routinely review, update, and enhance" their compliance procedures, risk disclosures, and operational resilience procedures, if any. The compliance methods include evaluations of cryptocurrency wallets, custody procedures, evaluations of Bank Secrecy Act (BSA) compliance, and valuation practices. Business continuity strategies and data integrity are examples of operational resilience techniques. Added the regulator:
The division will evaluate whether advisers are adhering to the Advisers Act's custody requirements with regard to cryptocurrency assets that are funds or securities (Rule 206(4)-2).
Furthermore, the SEC stated that while the Division of Examinations "will allocate significant resources to the examination issues," it will also carry out examinations focusing on new or emerging risks, goods, services, market events, and investor concerns.
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