Thursday, July 25, 2024

The United States Securities and Exchange Commission (SEC) recently released its examination priorities for the year 2024, outlining a heightened focus on the cryptocurrency market. According to the regulatory authority, the examinations of registered entities will concentrate on various aspects such as the promotion, sale, advisory roles, and trading activities related to cryptocurrency assets and associated products.

Focus Areas for the Division of Examinations in 2024

The SEC stated earlier this week that its Division of Examinations has disseminated the examination objectives for the year 2024, with the intent to inform both investors and registrants about key risk areas, topics under scrutiny, and priority sectors for the forthcoming year. The regulatory body elaborated that the forthcoming year’s examinations would prioritize not only the core and persistent risk areas but also those that represent emerging threats to investors or the financial markets.

In light of the sustained fluctuations and activities in the cryptocurrency markets, the division will persist in its surveillance efforts and, where warranted, initiate audits of registered entities.

The SEC specified that the examination will look into whether the registered organizations dealing with cryptocurrency assets are in compliance with their respective standards of conduct, particularly when offering advice or recommendations to clients and customers concerning crypto-assets.

Furthermore, the SEC emphasized its commitment to ensuring that such registrants continually refine their compliance procedures, risk disclosures, and operational resilience. This would encompass reviews of cryptocurrency wallet management, custodial practices, adherence to the Bank Secrecy Act, and valuation protocols. As for operational resilience, focus will be on the integrity of data and business continuity plans.

Regarding assets in the cryptocurrency sector that are categorized as funds or securities, the division will scrutinize whether advisers are meeting custody obligations under Rule 206(4)-2 of the Advisers Act.

In addition to dedicating substantial resources to issues pertinent to the cryptocurrency sector, the Division of Examinations will also allocate its capabilities to audits aimed at identifying new or burgeoning risks, various products and services, market phenomena, and investor apprehensions.

We invite your thoughts on the SEC’s intensified focus on cryptocurrency monitoring and examinations. Kindly share your views in the comments section.

Frequently Asked Questions (FAQs) about SEC 2024 examination priorities

What is the primary focus of the SEC’s 2024 examination priorities?

The primary focus of the U.S. Securities and Exchange Commission’s (SEC) examination priorities for 2024 is to enhance its monitoring and examinations in the cryptocurrency market. The SEC aims to scrutinize registered entities for their involvement in sales, advisories, and trading activities related to cryptocurrency assets and related products.

What are the key areas that the SEC plans to examine?

The SEC plans to examine various aspects including the promotion, sale, advisory roles, and trading activities related to cryptocurrency assets. It will also review whether registered organizations comply with their respective standards of conduct, especially when offering advice or recommendations related to cryptocurrency assets.

What operational practices will the SEC focus on?

The SEC will ensure that registrants continually refine their compliance procedures, risk disclosures, and operational resilience. This includes cryptocurrency wallet management, custodial practices, adherence to the Bank Secrecy Act, and valuation protocols. Focus will also be on the integrity of data and business continuity plans.

How will the SEC address assets in the cryptocurrency sector that are categorized as funds or securities?

The Division of Examinations will scrutinize whether advisers are meeting custody obligations under Rule 206(4)-2 of the Advisers Act for assets in the cryptocurrency sector that are categorized as funds or securities.

Will the SEC only focus on cryptocurrency-related issues?

No, in addition to dedicating resources to issues relevant to the cryptocurrency sector, the Division of Examinations will also allocate its capabilities to audits aimed at identifying new or burgeoning risks, various products and services, market phenomena, and investor apprehensions.

More about SEC 2024 examination priorities

  • SEC’s Official Announcement on 2024 Examination Priorities
  • Overview of the Advisers Act Rule 206(4)-2
  • Bank Secrecy Act Compliance Guidelines
  • U.S. Securities and Exchange Commission Official Website
  • Introduction to Cryptocurrency Regulation in the United States

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5 comments

CryptoQueen October 18, 2023 - 5:32 pm

Great piece, very detailed! SEC focusing on crypto isn’t surprising at all. Gotta keep up with the times, right?

Reply
FinanceGuru101 October 18, 2023 - 6:34 pm

interested to see how this pans out. if they’re thorough, could really shake things up in the crypto world. maybe for the better?

Reply
InvestSmart October 19, 2023 - 1:47 am

Regulation isn’t necessarily a bad thing ppl. If done right, it can actually boost investor confidence. let’s wait and see.

Reply
JohnDoe87 October 19, 2023 - 3:27 am

So the SEC is finally getting serious bout crypto, huh? well, it’s bout time if you ask me. Market needs some kinda regulation.

Reply
WallStVeteran October 19, 2023 - 7:29 am

They’ve been saying this for years. actions speak louder than words, so let’s see how many actually get examined in 2024.

Reply

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