SEC to Scrutinize Firms Offering Crypto Advice

  • The SEC recently warned investors to be cautious when adding crypto to their individual retirement accounts.
  • The SEC said it will prioritize the activities of firms offering crypto advice in 2023.

The US Securities and Exchange Commission (SEC) has announced that it will prioritize the handling of crypto assets in 2023. The SEC’s Division of Examination made this known during the annual meeting, revealing that crypto brokers and companies offering crypto investment advice will be closely observed by the SEC.

A statement from the SEC noted that SEC-registered brokers and advisers would have to follow “respective standards of care” when providing investment advice or making recommendations. The regulator said it will monitor such firms to see if they routinely evaluate and improve procedures to align with “compliance, disclosure, and risk management practices.”

Richard R. Best, Director, Division of Examinations, said:

Our examination program continues to move forward and remains committed to furthering investor protection through high-quality examinations and staying abreast of the latest industry trends and emerging risks to investors and the markets.

The SEC’s 2023 priorities resembled its 2022 priorities, although it appears this year the agency is focusing more on broker care and conduct rules. In 2022, the regulator focused on the risks posed by emerging technologies such as cryptocurrencies.

These priorities, according to SEC Chair Gary Gensler, are intended to safeguard investors as the crypto and tech markets continue to expand.  According to Gensler, the majority of cryptocurrencies are securities that need to be registered.

The SEC’s scrutiny of the crypto space intensified after the collapse of crypto exchange FTX. According to reports, the regulator has been investigating firms and individuals offering crypto advice without the necessary qualification.

On February 7, the Securities and Exchange Commission advised investors to exercise caution when adding cryptocurrencies to self-administered retirement accounts. Regulators and lawmakers have targeted crypto investment in and out of retirement accounts following a rough year that involved the collapse of platforms like FTX. Letitia James, the attorney general of New York, famously suggested banning cryptocurrency investments in IRAs and defined contribution plans in November.

Lawrence Woriji
Lawrence Woriji Verified Author

I have covered some exciting stories in my career as a journalist and find blockchain-related stories very intriguing. I believe Web3 will change the world and want everyone to be a part of it.

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