The SEC released a proposal to amend Rule 206 4-2, the custody rule. The current rule requires all investment advisors with the ability to possess client funds and securities to hold funds in a designated bank account and keep securities with a qualified custodian.
The Securities and Exchange Commission’s Division of Examinations noted that in fiscal year 2022, the Division examined approximately 15 percent of all registered investment advisers. The Division’s mission is to promote compliance, prevent fraud, monitor risk and inform policy.
The SEC proposed new rules regarding an investment adviser’s obligation to custody assets which would apply to all crypto assets. Currently, the Investment Advisers Act imposes various conditions on the custody of client funds and securities but does not cover crypto.
The Securities and Exchange Commission announced its inspection priorities for the current year. Priorities for the current year include checking compliance with recent rules, including the new marketing rule for advisers and Regulation Best Interest for broker dealers.
The SEC charged Kraken with offering and selling Kraken’s Staking Program as an unregistered security. Kraken, more formally known as Payward Venture and Payward Trading. Kraken has agreed to pay to cease selling securities through this service and pay $30 million.