SEC to Intensify Oversight of Bitcoin and Cryptocurrencies in 2025

• The SEC plans to increase its scrutiny of cryptocurrency companies by 2025, focusing on compliance and regulatory standards.
• This move signals the agency’s ongoing effort to align cryptocurrency practices with traditional financial regulations, with a focus on investor protection.

In 2025, the U.S. Securities and Exchange Commission (SEC) will significantly ramp up its oversight of Bitcoin and cryptocurrency-related businesses. As outlined in its fiscal year plan, the SEC intends to frequently review, update, and improve the compliance practices of companies involved in the cryptocurrency space. The regulator’s goal is to ensure that crypto-asset firms meet required standards and operate in line with existing financial laws. This heightened scrutiny aims to address the evolving risks posed by the rapidly changing cryptocurrency market.

The SEC’s focus will primarily be on businesses offering, trading, recommending, and advising on crypto-assets, particularly those classified as securities or related products. The agency has made it clear that it will closely monitor crypto-asset products like Bitcoin spot trades and exchange-traded Ether products. These reviews will assess whether companies are meeting their legal and regulatory obligations, especially when providing services to retail investors, including senior citizens and individuals investing for retirement.

The SEC’s emphasis on compliance will extend beyond basic regulatory checks. Companies dealing in crypto-assets will need to regularly review and enhance their compliance procedures. This includes adherence to the Bank Secrecy Act (BSA), the safeguarding of crypto wallets, and ensuring robust custody practices. Moreover, firms must prioritize operational resilience, focusing on data integrity, risk disclosures, and business continuity measures.

A major aspect of the SEC’s oversight will involve determining if companies adhere to established behavioral standards when they offer or recommend crypto-assets to clients. This is particularly relevant in scenarios where individual investors may be at greater financial risk, such as elderly citizens or those with retirement savings tied up in cryptocurrencies. The agency is set to thoroughly investigate whether companies provide appropriate advice and recommendations, helping protect investors from undue risk.

Under the leadership of Gary Gensler, known for his strict stance on cryptocurrencies, the regulatory landscape could become even more challenging. If political outcomes, such as Kamala Harris’s potential victory in the upcoming election, lead to Gensler ’s continued tenure, the SEC may push for even tougher enforcement. This could signal an era of stricter rules, designed to ensure that cryptocurrency firms align more closely with the stringent regulations governing traditional financial markets.

The SEC’s strategy of tightening control over the cryptocurrency industry isn’t new. Over the years, the agency has undertaken multiple actions against crypto firms, resulting in hefty fines, numerous legal proceedings, and even imprisonment in some cases. These actions demonstrate a clear pattern: the SEC is determined to maintain rigorous oversight of the crypto market, which it views as essential for safeguarding investors and ensuring that market practices comply with financial regulations.