On February 7, 2018, one day after Securities and Exchange Commission (SEC) chairman Jay Clayton testified before the Senate Banking Committee, the agency's Office of Compliance Inspections and Examinations (OCIE) published its 2018 National Exam Program Examination Priorities.
"OCIE publishes its exam priorities annually to improve compliance, prevent fraud, monitor risk, and inform policy," the commission explained in a release. "Of particular interest this year will be matters involving critical market infrastructure, duties to retail investors, and developments in cryptocurrency, initial coin offerings, and secondary market trading."
The portion on cryptocurrency, ICOs, secondary market trading, and blockchain appears under a section entitled "Retail Investors, Including Seniors and Those Saving for Retirement."
"The cryptocurrency and ICO markets have grown rapidly and present a number of risks for retail investors," writes OCIE. "Along with the growth of these products and markets, the number of broker-dealers and investment advisers engaged in this space continues to grow as well."
"We will continue to monitor the sale of these [cryptocurrency and ICO] products, and where the products are securities, examine for regulatory compliance," OCIE continues. "Areas of focus will include, among other things, whether financial professionals maintain adequate controls and safeguards to protect these assets from theft or misappropriation, and whether financial professionals are providing investors with disclosure about the risks associated with these investments, including the risk of investment losses, liquidity risks, price volatility, and potential fraud."
Yesterday, while addressing a question from Senator Elizabeth Warren (D-MA) about how to improve ICO oversight, Chairman Clayton said, "I don't think the gatekeepers that we rely on to assist us in making sure our securities laws are followed have done their job ... There are thousands and thousands of private placements that go on every year in the US. We want them to go on. We want people to raise capital but we want them to do it right."