The U.S. Securities and Exchange Commission (SEC) Examination Division announced its 2023 examination priorities, which include "Emerging Technologies and Crypto-Assets." The division publishes its examination priorities annually to help everyone gain insight into its risk-based approach, including areas it believes pose potential risks to investors.
The department said it will examine broker-dealers and registered investment advisers (RIAs) that use emerging financial technologies or adopt new practices, focusing on whether firms that handle digital assets “meet and follow their respective standards of care when making recommendations, recommending, or providing investment advice” and whether they continually review their compliance, disclosure, and risk management practices.
The department will also focus on ensuring that investment advisers comply with the new marketing rules implemented by the SEC last year, which restrict the use of recommendations and suggestions when promoting investments. Other agenda items that may apply to companies dealing with digital assets include reviewing the performance of investment advisers' fiduciary obligations, reviewing the cybersecurity practices of broker-dealers, investment advisers and other registrants, etc. The fiduciary part will include whether they properly assess risks, how they conduct asset custody and how advisers manage conflicts of interest. (Planet Daily)