The SEC Office of Compliance and Inspections and Examinations (OCIE) has released new examination priorities for 2020 covering digital assets and digital currencies.
The OCIE report states that advancements in financial technologies and methods of capital formation are growing rapidly, which poses new risks to retail investors and institutional investors alike.
The report reads:
“The digital assets market has grown rapidly and presents various risks, including for retail investors who may not adequately understand the differences between these assets and more traditional products.”
According to the report, the OCIE will monitor the risks associated with investment suitability, digital asset pricing and valuation, trading practices, the safety of client funds, and more throughout 2020.
Interestingly, the report makes no specific mention of initial coin offerings (ICOs), which have long been the focus of the SEC’s scrutiny in the digital asset space.
The omission of ICOs is telling of the evolution of the digital asset space, which has seen a marked decrease in the number of ICO sales since the market boom and bust of 2017/18.
The report also states that the OCIE will be identifying and examining “SEC-registered market participants” who are engaged in the digital asset space, presumably to ensure that all new offerings, even those from institutions, comply with regulations.