After a recent warning from the SEC, registered crypto companies and advisors may need to be nervous when giving advice this year. As Kriptokoin.com, we have compiled the details of the SEC’s investigation about crypto money companies for you.
Cryptocurrency companies need to be careful
Crypto brokers and investment advisors who bid or advise on cryptocurrencies will be covered by the United States securities watchdog this year.
A February 7 statement from the Securities and Exchange Commission’s (SEC) Review Division outlined its priorities for 2023 and suggested that crypto traders and advisors should be extra cautious when offering, selling or advising on digital assets.
He said SEC-registered brokers and advisors will be closely monitored to see if they adhere to ‘relevant standards of care’ when advising, providing referrals and providing investment advice.
The SEC will also examine whether these organizations ‘routinely’ review and update their procedures to ensure they meet ‘compliance, disclosure and risk management practices’.
The announcement sounds like the SEC’s priorities
This announcement was similar to the SEC’s priorities published in 2022, but it seems that this year the regulator is putting more emphasis on brokers’ standards and practices of care rather than considering the unique risks presented by the ’emerging financial technologies’ highlighted in 2022.
The latest announcement comes nearly two weeks after a report claimed the SEC was investigating registered investment advisors who could offer digital asset custody to their clients without the appropriate qualifications.
According to a report from Reuters, the SEC’s investigation has been ongoing for several months but now tops the priority list after the collapse of crypto exchange FTX.
By law, investment advisory firms must be authorized to provide custody services to clients and to comply with the custody measures set forth in the Investment Advisors Act of 1940.
Wall Street being investigated over crypto surveillance
The United States Securities and Exchange Commission (SEC) is investigating traditional Wall Street investment advisors who, without the appropriate qualifications, could offer digital asset custody to their clients.
On January 26, a Reuters report citing “three sources with knowledge of the investigation” said that the SEC’s investigation had been ongoing for several months but accelerated after the collapse of crypto exchange FTX. Sources said investigations by the SEC were previously unknown, as the agency’s investigations were not public.
According to the Reuters report, most of the SEC’s efforts in this investigation are investigating whether registered investment advisors meet rules and regulations regarding oversight of client crypto assets. By law, investment advisory firms must be ‘qualified’ to provide custody services to clients and comply with the custody measures set forth in the Investment Advisors Act of 1940.
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