SEC plans scrutiny of crypto dealer-brokers, transfer agents, per 2024 exam guide
The United States Securities and Exchange Commission released its 2024 examination priorities report on Oct. 16. The agency’s Division of Examinations has been publishing similar reports for over a decade to let its registrants know the emerging risks it will be focusing on. Crypto dealer-brokers, among others, have been given notice.
The SEC’s examinations division expanded its capacity and set up teams within its various programs to address crypto, fintech, AI and cybersecurity in 2023, the report said. It added that the SEC was continuing to observe broker-dealers and advisers working in crypto.
The division was looking at registrants that offer new practices, “particularly technological and online solutions that service online accounts aimed at meeting the demands of compliance and marketing,” such as “automated investment tools, artificial intelligence, and trading algorithms or platforms.”
Related: Coinbase continues push to compel SEC to act on crypto rulemaking petition
Examinations will look at how well registrants meet standards of conduct regarding customer advice and their understanding of the products the registrants offer. The report mentioned older investors and retirement assets specifically. They will also ensure that registrants are complying with the latest guidance. Here, “custody requirements under the Advisers Act” were singled out. The handling of risks associated with using blockchain and distributed ledger technology will also be assessed.
Examinations of transfer agents servicing crypto asset securities issuers or using emerging technologies in their work were mentioned separately.
Interesting to see that the SEC has identified prep for T+1 as an examination priority for brokers in 2024. The list
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