SEC’s 5-Point Playbook for Regulation: FY 2023 Highlights

The Securities and Exchange Commission (SEC) has unveiled its comprehensive activities and focal points for the fiscal year 2023, showcasing a strong commitment to understanding and regulating the ever-changing world of cryptocurrencies. Across different departments, the SEC is focused on protecting investors, ensuring the fairness of the market, and staying nimble in response to the fast-paced financial world.

Investment Management (IM) Division

Within the IM division, scrutiny of global market events and developments in the crypto sphere took center stage. A particularly sharp focus was directed toward mutual funds and ETFs eyeing investments in crypto-related instruments, emphasizing the paramount importance of safeguarding investors. Collaborative efforts with other SEC divisions aimed at vigilant monitoring of crypto asset trading, lending, and decentralized finance (DeFi) platforms, with stablecoins being a significant area of scrutiny.

Trading and Markets (TM) Division:

TM led the charge on multiple fronts, spearheading rulemaking initiatives to enhance market efficiency and competition. Proposals in December 2022 targeted the $40 trillion equity markets, introducing measures such as the best execution standard and addressing advantages in off-exchange market centers. Moreover, TM’s rulemaking efforts extended to bolstering market integrity, culminating in the adoption of final rules related to security-based swaps and credit ratings under the Dodd-Frank Act.

Also Read: SEC’s New “Crypto Assets” Section Hints at Regulatory Shift, Sparks Debate 

Corporation Finance (CF) Division:

CF is carefully reviewing documents from 7,800 public companies and entities eyeing public listing in FY 2023. The focus is on the increase in IPOs and SPACs. Public statements are being issued on disclosure requirements, covering essential topics like geopolitical tensions and disruptions within crypto asset markets. CF is also looking into disclosures under new regulations, including pay versus performance mandates.

Enforcement (ENF) Division:

ENF is actively investigating the evolving crypto asset space. Legal actions are being taken against individuals and entities involved in diverting customer funds, manipulating governance tokens, and offering unregistered securities through crypto-based lending programs. Notably, enforcement actions also target celebrities and influencers for promoting crypto asset securities without disclosing compensation.

Office of Compliance Inspections and Examinations (EXAMS):

EXAMS is prioritizing investor protection through thorough reviews focusing on Regulation Best Interest and fiduciary standards. Key areas include cybersecurity, operational resilience, crypto assets, Regulation SCI compliance, and environmental, social, and governance investing. The issuance of Investor Alerts, covering topics like crypto asset securities and investment scams linked to natural disasters, underscores the commitment to investor education.

Read More: Why Did Gary Gensler Do a U-Turn on Cryptocurrency?

In the intricate world of cryptocurrency, the SEC’s plans for 2023 emphasize its commitment to navigating challenges while safeguarding investors and maintaining market integrity.

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