The Office of Compliance Inspections and Examinations (OCIE) which is a part of the US Securities and Exchange Commission (SEC) has listed Digital Tokens as its top priority for 2019. The publication notes that the significance of Crypto Assets has grown significantly to warrant all the attention of the regulator.
Monitoring Cryptos is likely to yield positive regulatory policies that the industry needs in order to progress into the future. The OCIE currently defines Digital Assets as securities as they qualify for such a classification in the current law. This is the reason why monitoring their performance and conduct is a top priority.
Mitigating Risks In Cryptocurrency Markets
According to the OCIE report, Cryptocurrencies have been growing exponentially in the rennet past. The pace has outperformed regulatory changes that are needed to protect investors as the growth brings with it higher risks.
The monitoring body is also paying attention to Crypto markets participants such as investment advisors, broker-dealers, and trading platforms which are part of the growth. In specific terms, the body will be monitoring trading, offers and sales, and management of digital assets to enforce regulatory compliance as Cryptocurrencies are, technically, securities. This will also include prospective Crypto investments practices that are at the inquiry and study stage that entails ascertaining the opportunities and risks of Digital Assets.
Current Industry Players
Companies that are part of the Cryptocurrency industry will be the primary focus for OCIE. This is because the players are the driving force in Digital Assets adoptions and use in the mainstream economy. Additionally, these firms partake in the development and deployment of Blockchain platforms that generate Tokens to be used in the Digital Assets space. In this regard, internal operations in these Blockchain firms including internal controls, the price, and management of customer portfolios, and trading activities at a company level. According to the office, the prioritization efforts will ensure that customer funds are protected from non-complying actors.
The document shows that the OCIE is alive to the fact that cybersecurity is the greatest threat to Digital Asset holders and it is the role of Cryptocurrency firms to develop architectures with bank-like security features. Many retail investors are not well educated on the responsibilities of service providers such as custodial services, crypto exchanges, ICO providers etc. and they often gamble their chances of not landing at a fraudster or a poorly managed platform. This is deemed to change.
Fighting Money Laundering
The SEC is also aiming to intensify its AML campaigns against money laundering in the dark web which is a national security threat. As reported by Blokt, the campaign involves delving deep into the Cryptocurrency industry and approving procedures for customer due diligence, customer identification, and monitoring of suspicious activity. However, the main focus will be to protect Cryptocurrencies with on the premise of protecting consumers from the risks that the emerging industry poses.
Since the appointment of Jay Clayton as the SEC chair by President Donald Trump, Cryptocurrencies have come under the sharp focus of the agency. On the brighter side, this might lead to the enactment of policies that are Crypto friendly in the foreseeable future.