Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
The regulatory watchdog has recently published a report which talks about the examination and compliance inspection of the emerging cryptocurrency market.
Monitoring and examining the cryptocurrency market will one of the top priorities of the regulatory watchdog – the U.S. Securities and Exchange Commission (SEC) – in 2019. The SEC has recently published a report, called the Office of Compliance Inspections and Examinations (OCIE), for 2019.
The OCIE report mentions six “themes for OCIE’s 2019 Examination Priorities” that include digital assets in the form of digital tokens, cryptocurrencies, and coins. Moreover, the OCIE will also monitor crypto market activities including the ‘offer and sale, trading, and management of digital assets’.
Besides monitoring the emerging market, OCIE will also push compliance for existing security laws. Hence for any digital asset classified as a security, the compliance wing will ensure the enforcement of proper regulatory measures. The OCIE report notes:
OCIE will take steps to identify market participants offering, selling, trading, and managing these products or considering or actively seeking to offer these products and then assess the extent of their activities. For firms actively engaged in the digital asset market, OCIE will conduct examinations focused on, among other things, portfolio management of digital assets, trading, safety of client funds and assets, pricing of client portfolios, compliance, and internal controls.
Major Purpose of Protecting Retail Investors
The report notes that the basic goal of OCIE will be to protect the investors’ interest in this nascent cryptocurrency market. Furthermore, OCIE will also enlighten investors regarding the risks of investing in crypto assets. The report notes that the areas prioritized for examination are selected on policies, assessment or risk, and various sector.
“Areas of focus will include, among other things, whether financial professionals maintain adequate controls and safeguards to protect these assets from theft or misappropriation, and whether financial professionals are providing investors with disclosure about the risks associated with these investments, including the risk of investment losses, liquidity risks, price volatility, and potential fraud.”
Currently, there’s a growing sentiment that SEC’s actions have a negative impact of the growth of the crypto sector. The issue of approving a Bitcoin ETF has been lingering for long. In November 2018, the SEC chairman expressed unwillingness approve Bitcoin ETF until the exchanges bring better surveillance tools.
Later, in December 2018, the chairman also said that ICOs are good fundraising schemes provided “securities law is followed”.
“I believe that ICOs can be effective ways for entrepreneurs and others to raise capital. The novel technological nature of an ICO does not change the fundamental point that, when a security is being offered, our securities laws must be followed,” he said.
Crypto investors have been heavily weighing on the arrival of Bitcoin ETF to bring back the bullish momentum in the crypto market. However, the SEC has always turned a cold shoulder to it. Last month, the SEC Commissioner said that crypto investors shouldn’t keep many high hopes from the agency. The approval of Bitcoin ETF is a critical issue and it can take anywhere between a few days to many years.
Despite the long going matter, asset management company and index fund provider Bitwise has recently applied for Bitcoin ETF with the SEC. Bitwise says that it has considered all regulatory requirements before its latest application.