• The Securities and Exchange Commission (SEC) is in charge of regulating the US securities markets, including cryptocurrency.
• The SEC has released its yearly assessment goals regarding how it will keep watch of developing risks, including the management of crypto assets.
• Brokers and advisors dealing with cryptocurrency must adhere to standards of care for investors and routinely review their risk management systems.
SEC Regulates US Crypto Markets
The Securities and Exchange Commission (SEC) is in charge of regulating the United States’ securities markets, including cryptocurrencies. In order to protect investors from potential risks, the SEC has released its annual assessment goals outlining how it will monitor developments in the industry.
Crypto Classified as Securities
The regulator has taken a cautious approach to regulation by classifying the majority of cryptocurrencies as securities and subjecting them to federal rules. Brokers and advisers dealing with cryptocurrency must ensure they are adhering to ‘standards of care’ for investors, as well as regularly updating their risk management systems.
Investment Advisers Act
The Investment Advisers Act of 1940 stipulates that investment counseling entities must be qualified to offer custody services to clients and conform with custodial precautions. The SEC’s examinations unit will evaluate brokers-dealers and investment advisers that utilise innovative financial technology such as cryptocurrency in order to ensure they are meeting these requirements.
Chairman Gary Gensler
SEC Chairman Gary Gensler has long held that most cryptocurrencies should be classified as securities, making them subject to examination and regulation by the agency. This commitment shows that the regulator takes investor protection seriously when it comes to digital assets such as cryptocurrencies.
Overall, this article shows that the SEC is taking an active role in monitoring cryptocurrency markets for potential risks in order to safeguard investors from harm. By classifying most coins as securities, brokers and advisors involved with crypto must adhere strictly to regulations outlined by the Investment Advisers Act in order secure customer funds properly.