SEC to tighten scrutiny of crypto advisory firms

The US Securities and Exchange Commission (SEC) will tighten its oversight of advisory companies operating in the cryptocurrency industry to ensure their investment advice is sound.

SEC Review Division Releases Statement Outlining Regulator's Priorities for 2023. One of them will be a closer scrutiny of brokers and advisors giving advice on digital assets.. The statement says they should be especially careful as the cryptocurrency market is brimming with risky or fraudulent assets.

The SEC will review whether consulting firms comply with applicable service, disclosure, and risk management standards, and how often such entities review and update their procedures.

In addition, the Commission will monitor information security and operational resiliency in such companies, checking how they protect the data of their investors.. Attention will be focused on companies that use the services of third-party providers in matters of cybersecurity.

Earlier, the regulator began checking Wall Street financial advisors that provide custody services for digital assets.