- The SEC is going to focus on crypto “broker-dealers and RIAs” in 2023
- The agency wants to ensure that those offering investment advice are playing by the rules
- Given that the SEC thinks that all cryptocurrencies bar Bitcoin are securities, this could make it a busy time for brokers
The Securities and Exchange Commission (SEC) has said that it will focus on crypto “broker-dealers and RIAs” this year to make sure they are compliant with the investment advice they offer. In its 2023 priorities update, the SEC announced that it will be targeting brokers to ensure that they are not selling or recommending securities, but given that this means all cryptocurrencies as far as the SEC is concerned, this is no small undertaking.
Broker-dealers Top SEC’s Crypto Priorities List
Every January the SEC releases an update of the areas in which it will focus its efforts, although this year’s focus represents something of a change in routine:
Examinations of registrants will focus on the offer, sale, recommendation of, or advice regarding trading in crypto or crypto-related assets and include whether the firm (1) met and followed their respective standards of care when making recommendations, referrals, or providing investment advice; and (2) routinely reviewed, updated, and enhanced their compliance, disclosure, and risk management practices.
The SEC typically targets crypto exchanges or individual projects, so the fact it has gone for already registered brokerages is a little different from the norm. It’s not overly surprising however when taken in the context of what SEC chair Gary Gensler said in 2021 when he talked about wanting to “bring the similar protections to the exchanges where you trade crypto assets as you might expect at the New York Stock Exchange or Nasdaq”.
Still in Crypto Exchange Territory
While this move is a step away from dealing directly with exchanges, as the SEC has done with Binance and Coinbase in recent months, it nevertheless represents the same wheelhouse, ensuring that brokers are recommending and selling securities, much like exchanges might do. Of course, given that the SEC thinks that all cryptocurrencies apart from Bitcoin are securities anyway, every broker under the sun could be receiving a phone call in 2023.
