FINRA’s Latest Guidance on Crypto

FINRA has issued an update concerning member securities firms’ engagement with crypto assets. This development is part of FINRA’s broader mission to address the regulatory complexities posed by digital assets, which are primarily facilitated through blockchain technology. With crypto assets encompassing a broad range of virtual currencies, coins, and tokens, FINRA is keenly focused on ensuring that member firms navigate these new financial frontiers within the bounds of existing regulations.
One significant development is the issuance of a detailed crypto asset questionnaire to nearly 600 member firms, aimed at capturing and validating information about their crypto asset activities. This questionnaire helps FINRA gauge the extent of member firms’ involvement in crypto activities, whether through direct business engagements or through affiliations with crypto asset entities. The questionnaire’s findings have revealed a variety of activities, including private placements, alternative trading systems, and custody services related to crypto assets.
The update highlights a series of themes emerging from FINRA’s review of the questionnaire responses and ongoing regulatory operations. For instance, member firms are increasingly involved in facilitating crypto asset transactions through affiliates or third parties, and some are engaged in distributed ledger technology initiatives. Additionally, a number of firms are linked to crypto asset exchanges or have partnerships with crypto asset intermediaries. These findings underscore the growing intersection between traditional securities firms and the expanding crypto asset market.
FINRA’s oversight also encompasses addressing potential regulatory violations. The regulatory body has observed potential breaches of various FINRA rules, including those related to communication, supervision, and anti-money laundering. Notably, FINRA has issued disciplinary actions against firms and individuals for misrepresentations, failures in due diligence, and violations related to outside business activities and private securities transactions involving crypto assets.
FINRA’s latest update serves as a crucial reminder for member firms to remain vigilant and proactive in their approach to crypto asset activities. The rapidly evolving nature of digital assets necessitates a robust framework for compliance, including rigorous supervision, due diligence, and adherence to established regulations.
The securities fraud lawyers at Greco & Greco have been protecting the rights of securities firm customers for thirty years. If you have lost a portion of your savings in crypto or digital assets as a result of the activities of your financial advisor or FINRA brokerage firm, please contact Scott Greco for a free attorney consultation regarding your potential claim.