SEC Plans to Probe Crypto Dealer-Brokers, Transfer Agents in 2024 Exam Guide
The United States Securities and Exchange Commission On October 16, it released the 2024 Exam Previous Papers Report. The agency's testing division has been issuing similar reports for more than a decade to keep subscribers informed of emerging risks. Crypto dealer-brokers and others have been notified.
The SEC's examination division has expanded its capabilities and established teams in various programs to address crypto, fintech, AI and cybersecurity by 2023, the report said. The SEC continues to monitor broker-dealers and advisors working in crypto, he added.
The division was looking at registrants offering new practices, “specifically technological and online solutions aimed at meeting online account compliance and trading needs,” such as “automated investment tools, artificial intelligence and trading algorithms or platforms.”
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Tests look at how well registrants meet ethical standards regarding customer advice and the registrant's understanding of the products they offer. The report specifically mentions older investors and retirement assets. They also ensure that registrants comply with the latest guidelines. Here are the “protection requirements under the Advisers Act”. Managing the risks associated with using blockchain and distributed ledger technology is also reviewed.
Investigations of transfer agents serving crypto asset underwriters or using emerging technologies in their work are singled out.
Interestingly, the SEC has identified T+1 preparation as a priority for brokers in 2024. The list mostly focuses on things related to plumbing, but it shows that they will be releasing the red pen before May. next year. #finreg pic.twitter.com/RsPnL6JZtq
— Virginie O'Shea (@virginieoshea) October 16, 2023
The Examinations Department has published examination updates before, but this is the first time at the start of the new financial year. Divisional Director Richard Best said:
Continuing to make our testing priorities public will increase the transparency of the testing program and encourage firms to focus their compliance and monitoring efforts on areas that can increase their exposure to retail investors.
According to the SEC, test priorities are determined by input from test staff over the past year, as well as from investors, industry groups and similar sources.
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