2023 Regulatory Year | SEC Announces Cryptocurrency as Top Regulatory Priority, Caution Advised for Crypto Investment Advisers and Exchanges!

The U.S. Securities and Exchange Commission (SEC) has released its 2023 priorities, which include emerging technologies and crypto assets, with a particular focus on regulating investment companies and investment advisors.

Exchanges and Cryptocurrency Investment Advisers Beware

Broker-dealers and registered investment advisers utilizing emerging financial technologies are under scrutiny by the SEC to ensure compliance and adherence to marketing standards in serving investors with their technology and online solutions.

The SEC pays particular attention to activities related to the issuance, sale, recommendation, and advisory services in cryptocurrency or cryptocurrency-related activities.

The SEC requires these companies or individuals to:

• Adhere to prudent standards in providing recommendations, advice, and investment opinions
• Regularly review, update, and enhance their compliance, disclosure, and risk management

Exchanges are the most common cryptocurrency broker-dealers and are currently the most prevalent cryptocurrency-related businesses among users. In the cryptocurrency industry, the role of investment advisers, which has received less attention in the past, is quite prevalent and lacks regulation. The registered investment advisers mentioned in this context are generally individuals or companies registered with the SEC as securities investment advisers, and it is unclear how broadly defined their scope is within the cryptocurrency industry.

However, it is certain that the SEC's regulatory focus this time is broader. It includes the addition of investment advisers and the regulation of investment companies. Private fund investment advisers will also be scrutinized for their risks, including advisers' fiduciary responsibilities and conflicts of interest.

The SEC also emphasizes setting standards and solving problems to protect the interests of retail investors, rather than allowing investment advisers to prioritize their own interests.

Recently, the White House in the United States also released a plan to mitigate the risks of crypto assets, focusing on preventing the impact of the crypto market on financial stability:

The Biden administration's plan for crypto asset risk: priorities for the development of cryptocurrencies to be announced in a few months