SEC Puts Crypto Assets at the Center of 2025 Examinations
The United States Securities and Exchange Commission has included the sector of cryptocurrencies in its primary areas of concern in the 2025 examination priorities. In a statement on October 21, 2023, the Division of Examinations of the US Securities and Exchange Commission announced plans to examine crypto assets and their respective services. Primary concerns involve the spot Bitcoin and Ether exchange-traded products that emerged in 2024.
SEC’s Focus on Investor Protection
It also added that the crypto markets examination will equally depend on the offering, sale, recommendation, and trading of crypto assets. Because of the volatility and other risks associated with crypto asset markets, it is committed to effort and commitment to close monitoring that will protect investors. It has also revealed that the Division of Examinations will examine the practices of the registrants with a view to ensuring that they put in place effective technological risk management practices, especially the ones related to the use of blockchain and distributed ledger technologies.
Keith Cassidy, the acting director of the SEC’s Division of Examinations, has emphasized that this year’s priorities reflect what is likely to be the most vulnerable points in the crypto market, focusing on trying to reduce potential harm to investors. It is an ambition completely in compliance with the rules and working out appropriate measures for crypto asset protection by all parties providing services related to crypto assets.
Spot Bitcoin and Ether ETFs in Focus
One of the great features of the SEC’s 2025 priorities is the inclusions of spot Bitcoin and Ether ETFs. The regulator will review such products once spot Bitcoin ETPs were approved in January 2024 and Ether ETPs in May 2024, considering their consequences for the market and the investors’ exposure to risk. This marks a shift from priorities set in 2024 and indicates growing adoption and institutionalization of such digital assets into the mainstream of financial markets.
Changes in Leadership Potential
While the SEC’s 2025 examination priorities are now defined, it is likely to be quite some time before the commission’s leadership does likewise. The commission’s chair, Gary Gensler, whose term is not due to expire until 2026, may leave as early as January 2025, pending the result of the next U.S. presidential election. Both Donald Trump and Kamala Harris reportedly have potential Gensler replacements lined up, should either their respective parties win the upcoming presidential election.
Ongoing Legal Fights for the SEC
With Gensler, the SEC’s mode of operation in regulating crypto has received many criticisms, most times described as “regulation by enforcement.” A number of lawsuits remain outstanding, including those related to major players such as Coinbase and Ripple. More recent legal developments, such as a ruling by the Supreme Court against the Chevron doctrine, will perhaps have an effect on the SEC’s future actions in court but its ongoing cases are expected to continue well into 2025.
