A lot can change in the world of crypto over a 48-hour period. The publication of new regulations in China, which will come into effect this February, marked the end of a long period of uncertainty in the world’s most populous country. And now, in the very same week, the US Securities and Exchange Commission (SEC) has announced that crypto is a top priority this year.
In a document entitled “2019 Examination Priorities”, the Office of Compliance Inspections and Examinations (OCIE) states that it will be investigating cryptocurrencies for the express purpose of understanding how investors can be protected.
The document reads,
“OCIE will take steps to identify market participants offering, selling, trading, and managing these products or considering or actively seeking to offer these products and then assess the extent of their activities. For firms actively engaged in the digital asset market, OCIE will conduct examinations focused on, among other things, portfolio management of digital assets, trading, the safety of client funds and assets, pricing of client portfolios, compliance, and internal controls.”
Under the current climate in the US, there is a great deal of uncertainty in the crypto and blockchain world. As yet, the SEC has not announced specific criteria or guidelines that anyone can really understand. This has led to a number of cease and desist orders, particularly in the volatile ICO market.
However, the SEC has also taken aim at exchange-traded funds (ETFs), a potentially lucrative and successful vehicle for Bitcoin in particular. So far, all attempts at gaining approval for an ETF have been turned down, with several high-profile failures from the Winklevoss twins.
ETFs may be an issue that are up for review as well, as reports suggest that Japan is considering an ETF approval of its own. Although unconfirmed, such a move would be a massive head turner for investors in the US, and for the SEC, as major crypto-trading countries look to provide more clarification and a unified stance.
The SEC will also investigate cybersecurity in 2019, in a move to provide greater protection to financial markets. This will also impact the crypto sphere, along with a review of current anti-money laundering procedures that could inform a regulated crypto market.
The article states,
“OCIE will continue to prioritize cybersecurity in each of its five examination programs. Examinations will focus on, among other things, proper configuration of network storage devices, information security governance generally, and policies and procedures related to retail trading information security. Specific to investment advisers, OCIE will emphasize cybersecurity practices at investment advisers with multiple branch offices, including those that have recently merged with other investment advisers, and continue to focus on, among other areas, governance and risk assessment, access rights and controls, data loss prevention, vendor management, training, and incident response.”