SEC Says Monitoring Advisors Shilling Crypto a Top Priority in 2023

The SEC said it will be examining crypto brokers and advisors to ensure adequate risk management and “standards of care.”

2 min read

Feb 8, 2023

The U.S. securities regulator will focus on cryptocurrencies and emerging technologies as one of its priorities this year, as it tries to keep up with the changing landscape of finance.

In a statement, the Securities and Exchange Commission (SEC) said it chose focus areas that it believes present potential risks to investors and the integrity of the American capital markets.

The priorities are selected and published by the SEC’s Division of Examinations, which conducts markets analysis to identify potential risks.

“In a time of growing markets, evolving technologies, and new forms of risk, our Division of Examinations continues to protect investors,” said SEC Chair Gary Gensler.

“In executing against the 2023 priorities, the Division will help ensure compliance with the federal securities laws and rules.”

The Division plans to conduct examinations of broker-dealers and investment advisors who are using emerging financial technologies, including crypto. They will investigate whether these middlemen are meeting expected “standards of care” to investors and whether they are routinely reviewing and updating risk management procedures.

Richard R. Best, director of the Division of Examinations, said that the selected priorities reflect a “changing landscape,” as well as the risks that follow those shifts. By keeping on top of the latest industry trends, he said, the SEC would be better able to identify potential perils for both investors and markets.

Other areas to come under scrutiny this year include environmental, social, and governance (ESG) investing and the cybersecurity of securities professionals.

SEC under pressure

The SEC faced calls last month from Massachusetts Senator Elizabeth Warren to do more to fight crypto fraud.

While some would prefer the Commodity Futures Trading Commission (CFTC) to lead crypto regulation in the U.S., Warren said SEC rules represented the right approach for crypto.

The regulator has already been stepping up its oversight of the sector, last year bringing a record number of crypto-related enforcement actions.

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