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SEC outlines crypto priorities for 2020

By Lawrence Gash

US regulator will step up monitoring of agents using blockchain technology and keep watch on employees' 'outside activities'

US financial watchdog the Securities and Exchange Commission has outlined its priorities for the year ahead, including its attitude towards digital assets.

The Office of Compliance Inspections and Examinations (OCIE) of the SEC said the “digital assets market has grown rapidly and presents various risks, including for retail investors who may not adequately understand the differences between these assets and more traditional products”.

This underlines the regulator's previous comments and actions. Since digital assets were first included in its priorities report two years ago, the SEC has stressed the risk posed by unregulated initial coin offerings (ICOs) and the need to safeguard investors from fraud.

The report said: "Due to these risks, OCIE will continue to identify and examine SEC-registered market participants engaged in this space. Examinations will assess the following: (1) investment suitability, (2) portfolio management and trading practices, (3) safety of client funds and assets, (4) pricing and valuation, (5) effectiveness of compliance programs and controls, and (6) supervision of employee outside business activities."

The OCIE also suggested increased monitoring of the “outside business activities” of employees in the crypto market. This will build on last year’s plan to monitor the portfolio management, pricing, trading practices and internal controls of market participants.

It also pledged to continue looking at the core role of transfer agents in the wider keeping of records and safeguarding of funds, and specified that it intended to analyse closely agents using blockchain technology and providing digital asset services.

The SEC had a busy 2019 in the digital asset space, shutting down multiple fraud cases and investigating a number of token sales. With its ourt case against Telegram’s $1.7bn (£1.29bn, €1.5bn) ICO still underwayand Facebook hoping to revitalise its Libra project, 2020 is set to be another busy year.

Further Reading: Telegram will not integrate TON Wallet with messaging service

Further Reading: US regulator delays decision on world’s first Bitcoin ETF

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