SEC to Step Up Inspection of Crypto Consultancy Firms
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SEC to Closely Monitor Crypto Firms Offering Advice on Cryptocurrencies
According to the statement, SEC-registered brokers and advisors will be closely watched to see if they followed their “respective standards of care” when making recommendations, referrals, and providing investment advice. The SEC will also be examining whether these entities “routinely” review and update their procedures to ensure they meet “compliance, disclosure, and risk management practices.”
This announcement is similar to the SEC’s priorities released in 2022, however, it seems this year the regulator is putting more emphasis on standards of care and practices by brokers, rather than their consideration of unique risks presented by emerging financial technologies highlighted in 2022.
The latest Announcement Follows A Similar Report on the SEC's Investigation
The most recent statement comes nearly two weeks after a report claimed the SEC has been investigating registered investment advisers that may be offering digital asset custody to its clients without proper qualifications. The SEC’s investigation has reportedly been going on for several months but is now top of the priority list after the collapse of the crypto exchange FTX, according to a Reuters report.
By law, investment advisory firms must be qualified to offer custody services to clients and comply with custodial safeguards set out in the Investment Advisers Act of 1940.