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
US Financial Authority Asks Brokerage Firms to Disclose Crypto ActivitiesThe 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):
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:
Furthermore, until July 31 next year, the Authority “encourages each firm to keep its Regulatory Coordinator abreast of changes in the event the firm, or its associated persons or affiliates, determines to engage in activities relating to digital assets not previously disclosed.”
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.”