The U.S. and European regulators made cryptocurrency their main focus this year. Several organizations released new documents during the last days, highlighting different angles they are going to study or restrict. The European Securities and Markets Authority (ESMA) published “Strategic Orientation 2020-22”, expressing concern about the cyber dangers. The regulator plans to join forces with national regulators in its attempt to prevent cybercrime.
ESMA also stresses the importance of acknowledging the risks which may arise from digitalization, by ensuring business continuity and good protection against cyberthreats, as well as the use of the newest technology. According to the document, ESMA intends to actively study all the new opportunities. Offered by technology, especially the ones involving investor protection and know-how with national authorities.
The securities and Exchange Commission (SEC)’s Office of Compliance Inspections and Examination (OCIE) suggested that on-going advancements in financial technologies, as well as digital assets, need closer attention and review. Especially in the light of the digital assets market’s rapid growth, which contains many risks for investors, if they don’t recognize the differences between the former and more traditional products adequately.
According to the office, their priorities consist of investor protection, supporting the responsible capital formation and ensuring market integrity. The office also finished the SEC’s national exam program. Its results enable them to identify and monitor various risks, improve industry practices and react quickly in case of misconduct.
OCIE will continue to audit SEC-registered firms which are affianced in the digital asset field. The process will contain six main areas. They include portfolio management and trading practices, pricing and valuation, supervision of employees outside of business activities, investment suitability, the effectiveness of compliance programs and controls, and the safety of client funds and assets.
The office is also going to examine the Financial Industry Regulatory Authority (FINRA), including its operations and regulatory programs. As well as the quality of FINRA’s examinations of municipal advisors and broker-dealers.
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