Regulatory agency Securities and Exchange Commissions announced examination priorities for this year, focusing on cryptocurrency and digital assets. Subsequently, corporate and securities expert Katherine Wu targeted six critical areas on Twitter.
With investment suitability, the SEC plans to assess risk and probabilities in losses that could hurt investors, potentially kicking out scams in the industry.
To keep cryptocurrencies in line with other market sectors, the agency will also vet sources of data for portfolio management.
As custodial services and exchanges hold digital funds, SEC wants to focus on ensuring safety and better insurance.
The SEC will also prioritize pump-and-dump schemes, insider trading, and assessing market risk. Failure of the market to meet these standards resulted in a delay from Bitcoin ETFs.
More compliance programs will take place this year. Therefore, the SEC expects to green-light more blockchain projects.
All cryptocurrency broker-dealers must report outside business activities to the SEC starting this year. Most broker-dealers in other financial agencies also already legally need to report the same way.
The Cryptocurrency Act 2020
As part of the agency’s efforts to keep cryptocurrencies on top priorities, it proposed the Cryptocurrency Act 2020. So, this aims to provide clarifications on digital asset regulations that could reshape the crypto industry in the US.
Paul Goser, the senator who put the Act forward, divided digital assets into three main groups. The first describes cryptocurrencies.
Bitcoin, Bitcoin Cash, and Litecoin will similarly fall under this category, alongside other cryptocurrencies that don’t fall under current securities regulations. These are representations of the US currency, blockchain derivatives, or decentralized cryptographic ledgers.
Oracles and smart contracts are also under the same category.
Crypto-commodities are interchangeable tokens that contain forms of substantial fungibility. Thus, these assets must reside on a blockchain or a decentralized cryptographic ledger.
The bill describes the last type of coin as crypto-securities, which are tokens that fail the Howey Test.