SEC Increases Scrutiny on Crypto in 2025 Examination Priorities

The U.S. Securities and Exchange Commission (SEC) published “Examination Priorities” for the Division of Examinations for Fiscal Year 2025 this week.

The U.S. Securities and Exchange Commission (SEC) is ramping up its scrutiny of crypto assets in 2025, intensifying examinations of firms involved in offering, trading, and advising on these assets. The agency will focus on how these assets are handled as securities, ensuring compliance with standards and assessing technological risks tied to blockchain.

The SEC’s Division of Examinations is closely monitoring firms involved in the offer and sale of crypto assets, with specific attention to how these assets are recommended, traded, and handled as securities. According to the Division, “The Division continues to observe the proliferation of investments involving crypto assets and their associated products and services.” The SEC further detailed:

Given the volatility and activity involving the crypto asset markets, the Division will continue to monitor and, when appropriate, conduct examinations of registrants offering crypto asset-related services.

Examinations will concentrate on activities like the sale, trading, and advising of crypto assets, including widely known products such as bitcoin and ether exchange-traded offerings. The Division will assess whether firms adhere to their standards of conduct, particularly in dealing with retail investors, including those approaching retirement. Furthermore, firms are expected to routinely update their compliance frameworks, especially in areas related to crypto wallet management and custody practices. This includes ensuring their operations are resilient to disruptions and maintaining sound business continuity plans.

The SEC’s Division of Examinations is responsible for ensuring that firms regulated by the SEC, such as investment advisers, broker-dealers, and investment companies, comply with federal securities laws. Through its risk-based examination program, the Division identifies potential risks to investors and market integrity.

The SEC is also emphasizing the technological risks inherent to the crypto space. Acknowledging the importance of secure technology, the Division stated:

The Division will assess registrant practices to address the technological risks associated with the use of blockchain and distributed ledger technology, including risks pertaining to the security of crypto assets.

This examination of blockchain risks underlines the SEC’s commitment to protecting investors by ensuring that the platforms and technologies underpinning crypto transactions are secure. The regulatory focus on crypto assets is part of the SEC’s broader effort to manage emerging financial technologies and safeguard investors in a volatile market. By prioritizing crypto-related services, the agency aims to enhance market integrity and investor protection.