The United States Securities and Exchange Commission (SEC) is supposedly going to focus on cryptocurrency firms that act as “qualified custodians” for their customers’ crypto holdings.
According to a Bloomberg report, hedge funds, private equity firms, and pension funds could have a tougher time working with many crypto firms under this new draft proposal from the SEC.
A five-member SEC panel will decide on February 15 whether the proposal moves on to the next phase, according to the sources. The proposal must receive 3 out of 5 votes in order for the rest of the SEC to formally vote on it.
Last week, the SEC’s Division of Examinations announced its 2023 examination priorities to provide insights into its risk-based approach, including the areas it believes present potential risks to investors and the integrity of the U.S. capital markets.
The concerns of crypto assets and newly developed financial technology are also addressed in the report. Examiners would evaluate whether broker-dealers adhered to their standards when making recommendations, making referrals, or giving investment advice in relation to crypto or assets related to them.
The examiners will check whether the firms routinely reviewed, updated, and improved their compliance, disclosure, and risk management practices.
The Division will also concentrate on new or never-before-examined registrants that provide crypto or assets related to crypto.
Regulators have increased scrutiny of the crypto sector in an effort to lessen risks as a result of Sam Bankman-Fried’s FTX crash and other major collapses. Reportedly, the SEC sued Paxos over the Binance USD token as they sent a Wells notice stating that Paxos issued and listed BUSD as an unregistered security.
