SEC Ramps Up Scrutiny of Crypto Assets in 2025 Examination Priorities
The U.S. Securities and Exchange Commission (SEC) has announced its increased focus on crypto assets in its examination priorities for Fiscal Year 2025. Recognizing the rapid growth and complexity of the sector, the agency is intensifying its scrutiny of firms involved in offering, trading, and advising on these assets.
Specifically, the SEC's Division of Examinations is closely monitoring firms engaged in the offer and sale of crypto assets, with a particular emphasis on how these assets are recommended, traded, and handled as securities. The Division acknowledges the proliferation of investments involving crypto assets and their associated products and services.
As part of its examination priorities, the SEC will concentrate on activities such as the sale, trading, and advising of crypto assets, including well-known products like bitcoin and ether exchange-traded offerings. The agency will assess whether firms comply with their standards of conduct, especially when dealing with retail investors, including those nearing retirement. Firms are also expected to regularly update their compliance frameworks, particularly in areas related to crypto wallet management and custody practices, to ensure their operations are resilient to disruptions and maintain sound business continuity plans.
In its role of ensuring compliance with federal securities laws, the SEC's Division of Examinations oversees firms regulated by the SEC, including investment advisers, broker-dealers, and investment companies. Through its risk-based examination program, the Division identifies potential risks to investors and market integrity.
The SEC is also highlighting the technological risks associated with the crypto space. Recognizing the importance of secure technology, the Division will assess registrant practices to address the technological risks tied to the use of blockchain and distributed ledger technology, particularly concerning the security of crypto assets.
This examination of blockchain risks underscores the SEC's commitment to protecting investors by ensuring the security of the platforms and technologies underlying crypto transactions. The regulatory focus on crypto assets is part of the SEC's broader efforts to manage emerging financial technologies and safeguard investors in a volatile market. By prioritizing crypto-related services, the agency aims to enhance market integrity and investor protection.