Rajarshi Mitra
Independent Analyst
- The report by the agency includes its views on the oversight needs that are posed by digital assets.
- The agency will continue to monitor transfer agents’ role in record keeping and the safeguarding of funds.
The US Securities and Exchange Commission's Office of Compliance Inspections and Examinations (OCIE) has stated its priorities for this year. This includes its views on the oversight needs that are posed by digital assets. The agency spoke about the risks presented by the emerging digital assets market to retail investors who might not clearly understand the difference between the operation of these assets from the traditional ones.
The report by the OCIE noted:
Due to these risks, OCIE will continue to identify and examine SEC-registered market participants engaged in this space. Examinations will assess the following: (1) investment suitability, (2) portfolio management and trading practices, (3) safety of client funds and assets, (4) pricing and valuation, (5) effectiveness of compliance programs and controls, and (6) supervision of employee outside business activities.
In its 2018 examination priorities, the agency had included a section on cryptocurrency. It had spoken about the need to evaluate how service providers safeguard client assets and whether they clearly disclose the risks linked with their products.
In 2019, it announced its plan to monitor market participants in terms of portfolio management, trading practices, safety of client funds, pricing, compliance, and internal controls. Now in 2020, the OCIE has restated its previous year’s objectives. It has however added an assessment goal regarding the “supervision of employee outside business activities.”
The report also mentioned the agency’s plan to continue monitoring transfer agents’ role in record keeping and the safeguarding of securities and funds. The report noted that the main area of focus includes transfer agents who develop blockchain technology and those who provide digital assets services.
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