Wall Street investment advisers that provide clients with digital assets without the necessary qualifications are under investigation by the U.S. Securities and Exchange Commission (SEC).
According to a Reuters report published on Jan. 26, the probes are still active. However, after the FTX disasters, more people paid attention to the investigation. Unnamed sources said that the SEC’s investigations were conducted in secret.
The SEC, according to a source conversant with the situation, is seeking information about how businesses have acquired cryptocurrency exchanges. The widespread nature of the SEC’s enforcement action is indicative of a heightened level of regulatory scrutiny being applied to the cryptocurrency sector.
Firms can only hold client crypto assets or securities if they comply with the law. Having assets held by a third-party custodian service is one option. Even if the SEC doesn’t publish a directory of competent custodians, it’s nevertheless important to find one. Furthermore, businesses are not permitted to act as custodians by the SEC.
Compliance With Cryptocurrency Laws
Under new management, the SEC’s focus on cryptocurrency enforcement has only increased. Even still, the regulator is under constant pressure to take action against illegal behaviour in the bitcoin market.
The present investigation follows a series of failures in the crypto industry. That includes bringing fraud charges against Sam Bankman-Fried, FTX’s founder and former CEO. Investors in FTX stock are also being questioned by the regulator over the nature of their due diligence processes prior to making an investment in the cryptocurrency exchange.