Friday, August 24, 2018

SEC’s Office of Compliance Inspections and Examinations Begins Conducting Targeted Reviews Related to Crypto-Assets

The United States Securities and Exchange Commission’s (SEC) Office of Compliance Inspections and Examinations (OCIE) are now conducting examinations of investment advisers concerning “crypto-assets,” which they define to include crypto-currency, initial coin offerings, distributed ledger technology, blockchain or any related products, and pooled investment vehicles investing in these assets or technology.

The examinations are focused on gathering information about an investment adviser’s policies and procedures as it relates to these investments. Specifically, OCIE’s examiners are requesting information about:

  • How investment advisers are charging fees for services related to crypto-assets,
  • How crypto-assets are being valued,
  • Where crypto-assets are being held (i.e., in an individual wallet or at an exchange and what level of due diligence is performed on these custodians,
  • The disclosures and advertisements that are being made to investors about crypto-assets,
  • Information about the exchanges and brokers used for crypto-assets, and
  • How investment advisers are supervising employee or proprietary investments in crypto-assets.

A copy of the most recent request list is available here.

Stark & Stark has experience with crypto-assets, investment adviser supervision and compliance and remains available to advise on the SEC’s new initiative. Contact Max Schatzow in the firm’s Investment Management and Securities Practice Group at mschatzow@stark-stark.com or (609) 219-7450.



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