The US Securities and Exchange Commission (SEC) has published a notice mandating closer examination of crypto brokers and financial advisers.
The Securities and Exchange Commission (SEC) of the United States has declared that new regulations controlling cryptocurrency brokers and investment advisors providing clients with financial advice on cryptocurrencies would be implemented in the securities market.
The necessity for new rules was highlighted by the SEC in its public statement, which labeled digital assets like cryptocurrencies as “emerging technology” with “potential risk to investors and the integrity of the US capital markets.”
The article states that before selling, issuing, or advising the acquisition of a digital asset, crypto brokerage dealers, including advisers and businesses, must fulfill a number of requirements.
For instance, the company should continuously examine, update, and monitor its risk management procedures, disclosures, and compliance with SEC regulations.
At the start of 2022, the SEC released a notification in a like manner. The financial watchdog made clear throughout the year that it was interested in advocating for stringent rules on cryptocurrencies and other developing markets powered by blockchain technology.
The company also detained and filed charges against defendants who were allegedly involved in cryptocurrency hacks, frauds, and rug pulls. In contrast to the “risks involved in emerging technologies and crypto assets” bolded in last year’s publication, this year’s statement appears to take a different path on investment advice from registered firms in protecting individual investors.
A global wave of regulatory uprising was ignited by the collapse of FTX, a multibillion dollar empire that was once under Sam Bankman Fried’s control. To stop such catastrophic losses, financial watchdogs may keep a third eye on cryptocurrency companies and currently licensed investment advisors.
