Until last year, the Securities and Exchange Commission completely ignored cryptos when setting its rules and guidance. But since 2022, it has shown a real interest in the new asset class. In this context, the SEC of the United States published a new bulletin on Thursday. The document outlines the obligations of advisers and dealers to their clients. Also, the new bulletin specifically mentions cryptos. Here’s what US regulatory agency staff recommend for brokers and investment advisers.
SEC Focuses on Cryptocurrencies and Broker-Advisor Obligations
The Securities and Exchange Commission (SEC) continues to closely monitor the crypto sector and issue warnings. In the recent bulletin, its staff warns advisers and brokers against recommending cryptos without knowing them. He urges them to educate themselves well about the industry before advising their clients to make crypto investments.
SEC recommendations and the importance of an informed approach
Brokers and advisers must ensure that cryptos are in the best interests of clients before recommending them to them.”Some products are more complex or have additional risk characteristics, which can make it more difficult for businesses and their finance professionals to understand», has explained SEC staff in its bulletin. He pointed out that digital asset securities are one such particularly complex product.
The staff added: “So when brokers or advisers talk to their clients about cryptoassets, they need to make sure that the clients understand the products and that the crypto offerings are tailored to the clients’ specific financial situation.“.
It should be clarified that these declarations do not constitute a new rule of the American regulator. This is simply a staff perspective on existing regulations.
The warning from SEC staff comes some time after the agency proposed a rule related to qualified custodians. The regulator had summoned investment advisers in accordance with its laws to respect this rule. Also, it said that only qualified custodians were authorized to keep the cryptos of the clients of investment advisers. The SEC had clarified that crypto exchanges are not qualified custodians. The president of the agency then declared:Just because a crypto trading platform claims to be a quality custodian doesn’t mean it is“.
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