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.”
CBW - External Analyst