SEC increasingly strict on cryptos practices – Last week, the Security and Exchange Commission (SEC) released an 8-page document detailing its upcoming review of players in the crypto-active market. Two categories of players will be examined, namely investment advisors and brokers.
First of all, the investment advisors…
In recent weeks, the US regulator has noted issues that may present risks for the clients of these institutions. The SEC will therefore conduct a review of the portfolio management practices of cryptos investment advisors.
The agenda for this detailed review will include :
In addition, the advisors’ methods of retaining crypto-assets will also be scrutinized. Among other things, the SEC will review portfolio security procedures and the presence of unauthorized transactions.
…and then examine the brokers
The brokers will also receive the attention of the US financial policeman. Here, too, the program for reviewing sensitive processes is particularly busy. The SEC intends to examine not only anti-money laundering procedures, but also compliance with registration requirements with the various federal organizations.
Finally, the disclosure of conflicts of interest and outside business activities will be examined. The goal is to prevent a platform from trading against its clients, as BitMEX would have done under the governance of Arthur Hayes.
By requiring regulatory compliance on some 20 sensitive issues, the SEC is letting these players know that digital assets will be subject to the same level of control as traditional assets. However, new issues are emerging, such as the control of a client’s private keys by an investment advisor.