Digital Assets Land On SEC’s Compliance Examination Priorities List For 2020
The Securities and Exchange Commission (SEC) released their priority list for 2020, on Jan. 7 reaffirming its regulatory oversight in the cryptocurrency industry. While the previous priority lists in 2018 and 2019 explicitly focused on initial coin offerings (ICOs) and investments in the field, the new list promises a friendlier, gentler and more comprehensive outlook in new digital technologies such as virtual assets.
A new outlook on digital currencies in 2020
SEC’s Office of Compliance Inspections and Examinations (OCIE) released its 2020 examinations priorities including digital assets, again. According to the release, the examinations policy looks to deal with the increasing risks in the digital asset space protecting the retail investors “who do not understand this risk”.
“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.”
The 28-page document further expands into six policies including investment suitability, effectiveness of compliance programs, safety for client funds and assets in custodial services, pricing and valuation of crypto assets, portfolio management and trading practices and finally the staff at cryptocurrency companies and their outside businesses activities. Speaking on the release of the OCIE’s 2020 examination policies, SEC’s Jay Clayton said,
“OCIE’s 2020 examination priorities identify key areas of risk, both existing and emerging, that we expect self-regulatory organizations (SROs), clearing firms, investment advisers and other market participants to identify and mitigate.”
Despite the switch from regulatory stances in previous examination priorities to understanding and growing with the developments in the blockchain and cryptocurrency field, SEC do not intend to lift their foot off the gas pedal in the field come 2020.
There's no doubt that the SEC has stepped up their efforts in the crypto field outlawing launches of ICOs and security tokens such as Telegram’s GRAM token and apps such as KIK, along with the KIN token just in the past year. However, the field is still awaiting the commission’s approval of a Bitcoin ETF with the latest letter requesting approval sent by Bitwise Investments yet to be replied to by the commission.