SEC Division of Examinations reveals that it is tailoring its focus to emerging issues, such as crypto assets. This move comes on the heels of the heightened market volatility of cryptocurrency.
Crypto assets have been named as one of the top priorities of the Division of Examinations of the Securities and Exchange Commission. This new development was revealed on Wednesday as the office released its yearly examination priorities on Wednesday.
The SEC’s National Exam Program is overseen by the Division of Examinations, whose “goal is to protect investors, guarantee market integrity, and facilitate responsible capital formation through risk-focused initiatives,” according to its website.
The examination priorities, according to SEC Chairman Gary Gensler, identify significant risk areas that registrants, such as investment advisers, broker-dealers, self-regulatory organizations, and clearing firms, must “address, manage, and mitigate with diligence.”
Acting Director of the Division of Examinations Richard Best had this to say:
One of the five “major focus areas” listed in the Examination Priorities report is “emerging technologies and crypto assets.” Pension funds, environmental, social, and governance (ESG) investment, norms of conduct, data security, and operational resiliency are among the others.
“The Division will conduct examinations of broker-dealers and RIAs (registered investment advisors) that are leveraging innovative financial technology to examine whether the businesses recognized the specific risks these activities bring when building their regulatory compliance processes,” the SEC said. The securities regulator went on to say:
In addition, the Division will examine mutual funds and ETFs (exchange-traded funds) that have exposure to crypto assets to assess compliance, liquidity, and operational controls around portfolio management and market risk, among other things,” according to the article.