The SEC’s Office of Compliance Inspections and Examinations has made public its list of examination priorities. The watchdog has highlighted digital providers and service providers as critical areas of concern. Although OCIE had listed these items in its previous annual priority lists, the latest publication of crypto priorities for 2020 provided valuable insights into how the office’s approach has evolved since 2018.
Addressing the Efficacy of Compliance Programs
Previous priority lists briefly mentioned initial coin offerings and the risks that digital assets would pose to potential investors. However, this year OCIE seeks to bring forth aspects like fund safety, trading practices, investment suitability, and efficiency of compliance programs. The document also highlights the staffers of crypto exchanges and funds and the supervision of their external business activities. Thus, the crypto priorities for 2020 would offer ample insights into the overall crypto domain.
Digital Assets Pose Significant Risks: OCIE
The OCIE wrote that the rapid growth of the digital assets market would make the market fraught with risks. Thus, all stakeholders, including retail investors, would be at significant risk, especially if they didn’t adequately understand the differences between these assets and more traditional products. To this end, the crypto priorities for 2020 also entail examining transfer agents. It would include entities which act as intermediaries in securities transactions. They either develop blockchain technology or provide services to digital asset issuers.
Amidst the crypto priorities for 2020 could be Telegram’s scrutiny of Telegram and its ICO. The SEC had recently filed a request with the court to compel Telegram to reveal how it had spent the $1.7 billion that it had raised during its ICO in 2017. The Telegram group was to launch its TON network and GRAM token by the last quarter of 2019. However, the SEC obtained a restriction order against the issuance as the ICO wasn’t registered with the regulatory body.