Wall Streets main regulator is boosting its scrutiny of brokerages that deal in cryptocurrencies, according to two people familiar with the matter, the latest sign that authorities want to know more about a burgeoning market that they fear might be full of misconduct.
Brokerages have been peppered in recent weeks with questions from Securities and Exchange Commission examiners about their business practices and how they deal with clients, according to one of the people, who requested anonymity to discuss the review. Among other things, the SEC is seeking specific information about fees generated from trading, financing and initial coin offerings. The agency is also gathering data on investment advisers involvement, another person said.
Cryptocurrencies have gotten increasing attention in the past year from regulators including SEC Chairman Jay Clayton, who has said he believes the ICO market is rife with fraud. The agencys enforcement unit has sued firms that it says violated securities laws through coin offerings, and Bloomberg News has reported that Justice Department lawyers have opened a criminal probe into whether traders are manipulating the price of Bitcoin and other digital currencies.
Its predominantly smaller brokerage firms that deal with virtual tokens. No Wall Street banks currently trade cryptocurrencies.
The SEC review, being led by the Office of Compliance Inspections and Examinations, follows requests seeking information from hedge funds about how they price digital investments. It comes as industry self-regulators like the Financial Industry Regulatory Authority and the National Futures Association question member companies about their dealings in cryptocurrencies.
Theyre trying to understand the whole ecosystem, John L. Jacobs, executive director of Georgetown Universitys Center for Financial Markets and Policy, said of regulators inquiries. Theyre still wrestling with how to make sure that this an organized efficient marketplace.
Natalie Strom, a spokeswoman for Clayton, declined to comment.
OCIEs primary function is conducting examinations with the goal of protecting investors and ensuring market integrity. When the units inspectors spot signs of misconduct, they typically refer findings to the SECs enforcement division for further scrutiny that can lead to formal investigations, fines and other penalties when wrongdoing is found.
The cryptocurrency and ICO markets have grown rapidly and present a number of risks for retail investors, OCIE said in a February report outlining its exam priorities for this year. Areas of focus will include, among other things, whether financial professionals maintain adequate controls and safeguards to protect these assets from theft or misappropriation.
To be sure, some brokerages and money managers have reported their involvement to regulators and have asked for guidance to ensure theyre complying with the law. Others have been less forthcoming, and the regulatory landscape is complicated by legal wrangling over which assets should be considered securities under the SECs jurisdiction.
In addition to asking brokerages about whether theyve been involved with ICOs, the SEC has also been questioning firms over their clearing agreements, as well as personnel and other in-house matters, one of the people said. Finra, the front-line brokerage regulator overseen by the SEC, sent firms a notice last month asking them to notify the agency if they get involved with digital assets.
NFA, the industry-funded regulator for the derivatives industry, notified the Commodity Futures Trading Commission last month that it plans to require that firms dealing in the cryptocurrency derivatives and cash markets make additional disclosures.
This seems to be transitioning from where the house is on fire to incorporating supervision of the intermediaries, said Jeff Bandman, principal at Bandman Advisors whose clients include crypto firms.
With assistance by Matt Robinson
Brokers Cryptocurrency Deals Are Focus of SEC Review …
- Is Cryptocurrency Dead for Good? | Investopedia - December 6th, 2018
- Cryptocurrency scammers dupe Singaporeans out of $78,000 in ... - December 6th, 2018
- Invest in Cryptocurrency With Spare Change - Black Enterprise - November 28th, 2018
- What is Mining Cryptocurrency? What you need to know... - November 26th, 2018
- Saudi Arabia Will Launch Its Own Cryptocurrency in 2019 ... - November 23rd, 2018
- Bitcoin and Other Cryptocurrency Prices Are Crashing Again ... - November 17th, 2018
- Homepage - Cryptocurrency Army - November 14th, 2018
- Cryptocurrency - Simple English Wikipedia, the free ... - November 14th, 2018
- How To Create Your Own Cryptocurrency - fastcompany.com - November 14th, 2018
- Cryptocurrency price plunge worse than bursting of dotcom ... - September 18th, 2018
- Iran, North Korea and Venezuela turning to cryptocurrency ... - September 12th, 2018
- SEC halts trading in two cryptocurrency products, citing ... - September 12th, 2018
- Cryptocurrency News, ICO Reviews & Blockchain Updates ... - September 9th, 2018
- Cryptocurrency "miners," utilities look for ways to get along ... - August 29th, 2018
- Cryptocurrency: Virtual money, real power, and the fight ... - August 28th, 2018
- Pornhub Now Accepts PumaPay Cryptocurrency - August 27th, 2018
- NK hackers target Mac users with trojan cryptocurrency app ... - August 27th, 2018
- Cryptocurrency: The unlucky investors who got in at the wrong ... - August 26th, 2018
- cryptocurrency coins Archives - The Industry Spread - August 26th, 2018
- cryptocurrency Archives - Page 6 of 6 - The Industry Spread - August 26th, 2018
- Cryptocurrency investment in SMSF - hallandwilcox.com.au - August 26th, 2018
- How To Choose The Best Cryptocurrency Wallet - Crypto News AU - August 26th, 2018
- Courses | Cryptocurrency Australia - August 26th, 2018
- What Every Investor Should Know Before Buying Cryptocurrency ... - August 26th, 2018
- The biggest cryptocurrency hack in the history of blockchain - August 26th, 2018
- After the Bitcoin Boom: Hard Lessons for Cryptocurrency ... - August 21st, 2018
- Cryptocurrency Rankings | CryptoSlate - August 14th, 2018
- Bitcoin price falls after SEC postpones key ETF decision - August 12th, 2018
- 7 Cryptocurrency Predictions for the Rest of 2018 - August 7th, 2018
- Have a Cryptocurrency Company? Bermuda, Malta or Gibraltar ... - July 31st, 2018
- Bitcoin price live: Latest updates as cryptocurrency ... - July 22nd, 2018
- 2018 Bahamas Blockchain & Cryptocurrency Conference - July 16th, 2018
- Best Cryptocurrency Trading Platform 2018 | Top Crypto ... - July 13th, 2018
- Cryptocurrency: Advantages And Disadvantages Explained - July 12th, 2018
- ATB Coin - The fastest and most secure payment system - June 19th, 2018
- An Illustrated Glossary of Cryptocurrency Slang (Infographic) - June 19th, 2018
- Apollo All-in-One Cryptocurrency - June 3rd, 2018
- Cryptocurrency News, ICO Database, Coin Rankings and ... - May 25th, 2018
- CoinLib - Cryptocurrency prices now - May 21st, 2018
- Cryptocurrency Market Capitalizations | CoinMarketCap - May 4th, 2018
- CryptoCurrency Market , Coin Prices & Charts, Crypto ... - April 28th, 2018
- Nasdaq open to cryptocurrency exchange in future, says CEO - April 27th, 2018
- The 4 Top Cryptocurrency Mining Stocks -- The Motley Fool - April 27th, 2018
- One in five financial institutions consider cryptocurrency ... - April 27th, 2018
- New hacks siphon private cryptocurrency keys from ... - April 27th, 2018
- What Is Cryptocurrency? - dummies - April 21st, 2018
- Cryptocurrency Market Surges to $365 Billion, Start of a ... - April 21st, 2018
- BTCMANAGER | Bitcoin, Blockchain & Cryptocurrency News - April 16th, 2018
- How to keep your cryptocurrency safe - CNET - April 11th, 2018
- How do I report Cryptocurrency Mining income? - TurboTax ... - April 4th, 2018
- When do you report Cryptocurrency investments? - TurboTax ... - April 4th, 2018
- Trading Cryptocurrency in 2018: The Definitive Guide - March 14th, 2018
- How would one operate a Cryptocurrency Mining Pool and ... - March 13th, 2018
- Coinbase cryptocurrency index fund - Business Insider - March 10th, 2018
- Cryptosomniac | Cryptocurrency Price Tracker - Bitcoin & Eth ... - February 24th, 2018
- Cryptocurrencies News & Prices | Markets Insider - February 22nd, 2018
- I started cryptocurrency mining at the end of 2017 and was ... - February 20th, 2018
- Cryptocurrency News - Bitcoin, Ethereum, NEO, ICO startups - February 8th, 2018
- 7 Best Cryptocurrency Exchanges to Buy/Sell Any ... - February 8th, 2018
- Electroneum. The Mobile Cryptocurrency. - February 8th, 2018
- Cryptocurrencies trading | your guide in the world of trading ... - February 5th, 2018
- Robinhood trading app introduces cryptocurrency - money.cnn.com - January 28th, 2018
- Robinhood adds zero-fee cryptocurrency trading and tracking ... - January 28th, 2018
- Cryptocurrency Price Prediction, Comparison, Analysis - January 22nd, 2018
- South Korea's major cryptocurrency exchanges ... - reuters.com - January 13th, 2018
- Bitcoin-crazy South Korea may face a ban on cryptocurrency ... - January 13th, 2018
- Cryptocurrency - IC Markets - January 13th, 2018
- Kodak launches cryptocurrency, stock pops 125% - Jan. 9, 2018 - January 10th, 2018
- The cryptocurrency bubble is strangling innovation | TechCrunch - January 9th, 2018
- Coinschedule - The best cryptocurrency ICOs (Initial Coin ... - January 8th, 2018
- CCN: Bitcoin, Ethereum, ICO, Blockchain & Cryptocurrency News - January 7th, 2018
- Cryptocurrency boom: Why everyone is talking about ripple - January 4th, 2018
- Cryptocurrency stocks holding gains despite bitcoin pullback ... - December 29th, 2017
- MobileCoin: A New Cryptocurrency From Signal Creator Moxie ... - December 16th, 2017
- Cryptocurrency Definition | Investopedia - December 6th, 2017
- '$300m in cryptocurrency' accidentally lost forever due to bug ... - November 10th, 2017
- Amazon might want in on cryptocurrency - mashable.com - November 8th, 2017
- What is Cryptocurrency - earnlite.com - October 26th, 2017
- Cryptojacking Lets Strangers Mine Cryptocurrency With Your ... - October 21st, 2017
- Introduction to Cryptocurrency - CryptoCurrency Facts - October 14th, 2017