US Financial Authority Asks Brokerage Firms to Disclose Crypto Activities

The Financial Industry Regulatory Authority has issued a notice encouraging every firm that sells securities to the public in the U.S. to disclose any activities “related to digital assets, such as cryptocurrencies and other virtual coins and tokens.”

Firms Encouraged to Disclose Crypto Involvement

The Financial Industry Regulatory Authority (FINRA) issued a Regulatory Notice last week on digital assets.A not-for-profit organization authorized by Congress, FINRA is not part of the U.S. government but is tasked with protecting America’s investors by making sure the broker-dealer industry operates fairly and honestly, its website describes.

With few exceptions, the Authority explains that in addition to registering with the U.S. Securities and Exchange Commission (SEC):

Every firm and broker that sells securities to the public in the United States must be licensed and registered by FINRA.

Individual registered representatives must also register with FINRA. According to its website, FINRA had 629,112 registered representatives and 3,712 member firms in April.In the 4-page notice, the Authority emphasized that it “is monitoring developments in the digital asset marketplace and is undertaking efforts to ascertain the extent of FINRA member involvement related to digital assets,” adding:

FINRA is issuing this notice to encourage each firm to promptly notify FINRA if it, or its associated persons or affiliates, currently engages, or intends to engage, in any activities related to digital assets, such as cryptocurrencies and other virtual coins and tokens.

Monitoring Crypto Development

In FINRA’s Annual Regulatory and Examination Priorities Letter, published earlier this year, CEO Robert Cook pointed out that cryptocurrencies and initial coin offerings (ICOs) “have received significant media, public and regulatory attention in the past year.” The Letter highlights issues of importance to the organization’s regulatory programs.

Previously, the Authority issued a notice warning investors of pump-and-dump schemes. It advised them to “be cautious when considering the purchase of shares of companies that tout the potential of high returns associated with cryptocurrency-related activities without the business fundamentals and transparent financial reporting to back up such claims.”

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