The SEC has published a new document presenting the priorities for 2020, among which cryptocurrencies have also been included.
The document is entitled 2020 Examination Priorities and comes from the Office of Compliance Inspections and Examinations (OCIE) of the US Securities and Exchange Commission.
Although the term “cryptocurrency” is never mentioned, there is an entire chapter dedicated to digital assets, which states:
“The digital assets market has grown rapidly and presents various risks, including for retail investors who may not adequately understand the differences between these assets and more traditional products. Due to these risks, OCIE will continue to identify and examine SEC-registered market participants engaged in this space. Examinations will assess the following: (1) investment suitability, (2) portfolio management and trading practices, (3) safety of client funds and assets, (4) pricing and valuation, (5) effectiveness of compliance programs and controls, and (6) supervision of employee outside business activities”.
In addition, the SEC document also specifies that innovation and technological progress in the financial sector continue to grow rapidly and that the OCIE is focused on staying abreast of these developments to provide compliance and monitoring services as well as to assess their effectiveness.
There is also an explicit reference to blockchain technology when referring to agents handling transfers of securities.
Concerning the monitoring role of the OCIE, the document explains:
“Examination candidates will include transfer agents that serve as paying agents for issuers, transfer agents developing blockchain technology, and transfer agents that provide services to issuers of microcap securities, private offerings, crowdfunded securities, or digital assets”.
The document contains in its entirety the priorities under consideration by the OCIE for the fiscal year 2020, as was the case in the previous seven years. The aim is to promote and improve compliance with existing regulations in order to better protect investors.
The chapter dedicated to digital assets is minimal and by no means significant, although also those dedicated to other types of financial assets can be described as such. In fact, the document is not particularly long and it deals with many different issues, hence it covers the various topics in a very concise way.
Moreover, it is the result of various consultations of the OCIE itself with other sources and of collaborations with different divisions of the SEC and other regulators. The OCIE is open to comments and suggestions on how it can best fulfil its mission to promote compliance, prevent fraud, identify and monitor risks and inform the SEC.
From what can be read on digital assets, it appears that 2020 may not be much different than what occurred in 2019.