SEC published report on prioritizing issues Crypto among top priorities


On Wednesday Securities and Exchange Commission SEC’s
Division of Examinations published its report on prioritizing issues related to
information security and emerging technologies for the year 2022. The report
highlighted Crypto as among the top priorities in this year.
Five main focus area has been listed in Examination
Priorities report in which emerging technologies and crypto assets is one of
them. Pension funds; environmental, social, and governance (ESG) investing;
standards of conduct; and information security and operational resiliency are
the other focus areas. In its website, Division of Examinations highlights
about conducting SEC’s National Exam Program. It adds that the aims is to
protect investors, to ensure market integrity and supporting responsible
capital formation through risk-based strategies.
Regarding crypto assets, the SEC explained that as
part of its examination program, the Division will examine broker dealers and
registered investment advisors RIA who use new financial technologies to
determine whether they have considered the unique risks connected to these
activities when designing their regulatory compliance programs.
Additionally, the report states that the Division will
conduct examinations of mutual funds and ETFs that offer exposure to cryptoassets to assess, among other things, compliance, liquidity, and operational
controls relating to portfolio management and market risk.
According to SEC Chairman Gary Gensler key risk areas
will be identified by examination priorities which also SEC expects to put registrants.
These includes investment advisers, broker-dealers, self-regulatory
organizations, and clearing firms to address, manage, and mitigate with
vigilance.
The SEC division will examine registrants' IT
practices in relation to how they plan to protect investors' information,
records, and assets, as well as prevent interruptions of mission-critical
services. Examiners is seeking to review the intensity to which firms are
taking measures to protect customer accounts and prevent intrusions, properly
check and supervise vendors and other service providers. Also other measuring
steps are address malicious email activities like phishing, respond to
incidents like ransomware attacks, identify red flags related to identity
theft; and, manage overall operational risk as a result of remote work.
Division of Examinations’ acting director Richard said “In this time of heightened market volatility, our priorities are tailored to focus on emerging issues, such as crypto assets and expanding information security threats, as well as core issues that have been part of the SEC’s mission for decades such as protecting retail investors.”

Indrani bose
CBW - External Analyst
INDIA