The standards, written and published by the SEC's Division of Examination, are designed to prioritize risk areas that pose new threats to investors or market integrity.

The U.S. Securities and Exchange Commission (SEC) has published key areas of focus for reviewing market risks and participants for fiscal year 2024, announcing tighter scrutiny of crypto assets, blockchain, and other emerging financial technologies.

The standards, written and published by the SEC's Division of Examinations, will prioritize risk areas that pose new threats to investors or market integrity.

With respect to digital assets and blockchain specifically, the Division will continue to examine registrants with a focus on the offer, sale, recommendation, advice, trading, and other activities involving crypto assets or related products.

The focus of such reviews of registrants is twofold. First, registrants will be assessed on their “respective standards of conduct when recommending or advising clients and customers regarding crypto-assets, with an emphasis on initial and ongoing understanding of the products.” Second, registrants must “regularly review, update and enhance their compliance practices.”

The department emphasized that its attention will be on broker-dealers and advisers that offer new technology products and services, particularly those that provide automated investment advice. The agency’s interest in these categories highlights its concerns about the risks of using emerging technologies and alternative data sources.

This comes amid recent tensions between the SEC and the House Oversight and Accountability Committee, which recently saw SEC Chairman Gary Gensler threatened with enforcement proceedings if the agency failed to comply with the committee's oversight requests.

Nonetheless, Gensler has consistently rejected arguments calling for “regulatory clarity” in his cryptocurrency regulation speeches. He has often claimed that existing securities laws are sufficient to govern digital assets. In a June speech, Gensler stressed that the language used to label an investment contract does not change its essence, and that “the economic reality of the product (not the label) determines whether it is a security under the securities laws.” #SEC  #加密监管