Cryptocurrencies Will Be The Top Priority for US & EU Regulators, In 2020
This year in 2020, regulatory measures within the cryptocurrency industry shall be one of the key areas of focus for financial regulators in the European Union and the U.S.
Last week, the U.S. SEC’s Office of Compliance Inspections and Examinations (OCIE) announced its top priorities for 2020. The priorities include addressing the developments in financial technology including digital assets.
The OCIE stated that these advancements “warrant ongoing attention and review”. The document specifically states that “The digital assets market has grown rapidly and presents various risks, including for retail investors who may not adequately understand the differences between these assets and more traditional products”.
It further adds that “OCIE also will continue to identify and examine SEC-registered firms engaged in the digital asset space”.
The OCIE has said that it will be examining six crucial areas which include portfolio management, investment suitability, trading practices, pricing and valuations, effectiveness of compliance programs and controls, safety of clients funds, and supervision of employees outside of business activities.
On the other hand, the European Securities and Markets Authority (ESMA) has released a similar document dubbed Strategic.Orientation. 2020-2022.
In the document, the ESMA has mentioned that the “EU market participants to acknowledge the risks that may stem from digitalization by ensuring business continuity and the use of adequate and up-to-date technology, as well as adequate protection against cyberthreats, and through proper data protection and data quality management.”
It further adds that “The dangers of cyberthreats to the financial system as a whole and a sound legal framework for crypto assets are increasingly becoming areas of focus for ESMA together with the other European Supervisory Authorities, the European Systemic Risk Board, the European Central Bank and the European Commission”.
Over the last few years, financial regulators have doubled down their efforts on introducing new measures for businesses operating in the cryptocurrency space. Moreover, major economies across the globe are also working out taxation rules for profits derived from trading digital assets.
For e.g. the South Korean government recently decided to exempt cryptocurrency profits from any capital gains tax. However, this is subjected to changes in the future.