SEC Releases List of 2020 Crypto Examination Priorities

The SEC's Compliance Examination office has shared their list of 2020 crypto examination priorities. The SEC continues in the new year to examine crypto as its compliance office adds cryptocurrency-based digital assets to its annual priority list. 

08 January, 2020 | AtoZ Markets – The SEC’s Office of Compliance Inspections and Examinations (OCIE) has released its list of 2020 crypto examination priorities. It also highlights service providers within cryptography as an area of concern. The OCIE listed these items in previous annual priority lists. However, Tuesday’s publication gave a clearer overview of of the office’s approach and progress into cryptography since 2018.

OCIE Announces 2020 Crypto Examination Priorities

The previous priority list of the OCIE only mentioned the examinations of initial coin offerings (ICO) and the risks that digital assets could pose to retail investors. However, this year, the OCIE wants to address the relevance of crypto investments, trading practices, security funds, pricing and effectiveness of compliance programs. The document also mentions the crypto exchanges, funds and the “supervision” of their “external business activities”. The OCIE added:

“The digital assets market has grown rapidly and presents a variety of risks. The risk is particularly for retail investors who may not understand the differences between these assets and more traditional products”.

The OCIE will also examine transfer agents and other crypto entities. Especially those that act as intermediaries in securities transactions who develop blockchain technology. The compliance office will also check firms that provide services to issuers of digital assets.
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OCIE’s 2020 priorities for crypto differ from those of 2019. Since, they seem to be more concerned with the positive potential of the new financial technology. The office wrote that “the OCIE will also continue to identify and review SEC-registered companies that are engaged in the field of digital assets.”

Read More: South Korea Allows Bitcoin Derivatives for Financial Institutions

SEC Has Stepped up Its Engagement with Cryptos

On one hand, the SEC has greatly intensified its commitment and regulatory practices on cryptocurrencies. The office is in particular focussing on Initial Coin Offerings, which the SEC considers as unregistered securities offerings. Moreover, some examples of SEC actions against such ICOs include:

On the other hand, the SEC Commissioner Hester Peirce has expressed interest in promoting a more flexible regulatory approach to crypto offerings. It includes identifying offerings that don’t fall under the SEC’s purview. She also said:

“The biggest thing the crypto community needs is a way to move from a security offering to a utility token offering. Securities laws or the full panoply of securities laws do not cover that."

How will the landscape of cryptography develop further in 2020? Let us know your thoughts in the comments section below.

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