US SEC Continues To Scrutinize Crypto, Hints On Better Compliance

The United States Securities And Exchange Commission, known as the US SEC, continues to scrutinize cryptocurrencies as the compliance office adds fintech and digital assets to its priorities list for 2020. This is the latest move in the cryptonews hinting on new compliance features coming in the new year.

According to an announcement on January 7 coming directly from the US SEC Office of Compliance Inspections and Examinations (OCIE) the agency has put new financial technologies which include digital assets among the major concerns in the coming fiscal year.

In the words of the regulator, there are new technological developments in capital formation and investment advice which “warrant ongoing attention and review.” Meanwhile, OCIE made a similar announcement at the start of 2018 when it said that:

“OCIE will continue to monitor the offer and sale, trading, and management of digital assets, and where the products are securities, examine for regulatory compliance.”

The office responsible for investigating possibly illicit usage of securities shows that OCIE would be on the alert for compliance, but today’s announcement definitely suggests a sea change.

The 2020 policies outlined by OCIE for crypto differ from the ones of 2019 in the fact that they seem more broadly interested in the positive potential of financial technologies. As the office wrote, “OCIE also will continue to identify and examine SEC-registered firms engaged in the digital asset space.
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Meanwhile, the US SEC continues to step up its engagement with cryptocurrencies, especially initial coin offerings (ICOs) that it determines to be unregistered securities offerings.

Speaking with one media outlet last month, the US SEC Commissioner Hester Pierce expressed interest in promoting a more flexible regulatory approach to crypto offerings, including identifying offerings which do not fall under the SEC’s purview. As she said:

“The biggest thing the crypto community needs is a way to get from a securities offering to a utility token offering that is not covered by securities laws, or is not covered by the full panoply of the securities laws.”

Given the broad rise in interactions between legal authorities and cryptocurrencies, this news is hardly surprising. Yet, exchanges like Kraken report a major rise in requests from law enforcement to investigate transactions on the exchange. The Internal Revenue Service (IRS) has also been increasingly assertive in tracking cryptocurrency for taxation purposes.