U.S. financial authority asks brokerage firms to disclose crypto activity
The Financial Industry Regulatory Authority has issued a notice encouraging every company that sells securities to the public in the United States to disclose any activity “related to digital assets, such as cryptocurrencies and other virtual coins and tokens.”
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Companies Encouraged to Disclose Crypto Involvement
The Financial Sector Regulatory Authority (FINRA) has published a Regulatory Notice last week on digital assets.
A congressionally authorized nonprofit, FINRA is not part of the U.S. government but is charged with protecting U.S. investors by ensuring the brokerage industry operates fairly and honestly, its website describes.
With a few exceptions, the AMF explains that in addition to registering with the United States 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.
Registered individual representatives must also register with FINRA. According to its website, FINRA had 629,112 registered representatives and 3,712 member companies as of April.
In the 4-page opinion, the Authority stressed that it “monitors developments in the digital asset market and endeavors to determine the extent of participation of FINRA members related to digital assets”, adding :
FINRA is issuing this notice to encourage each company to promptly notify FINRA if it, or its associates or affiliates, is currently or intends to engage in activities related to digital assets, such as crypto. -coins and other virtual coins and tokens.
In addition, until July 31 of next year, the Authority “encourages each company to keep its regulatory coordinator apprised of any changes should the company, or its associates or affiliates, decide to move on. ‘engage in activities related to previously undisclosed digital assets’.
Monitoring the development of cryptography
In FINRA’s annual letter on regulatory and review priorities, released earlier this year, CEO Robert Cook noted that cryptocurrencies and initial coin offerings (ICOs) “have received attention. important media, public and regulatory issues over the past year “. The letter highlights issues of importance to the organization’s regulatory programs.
FINRA will closely follow developments in this area, including the role that companies and registered representatives can play in completing transactions on these assets and ICOs. When those assets are securities or when an ICO involves the offering and selling of securities, FINRA may review the mechanisms … that firms have in place to ensure compliance with federal securities laws and regulations and FINRA rules.
Previously, the Authority issued an opinion warn investors of pumping and emptying systems. He advised them to “use caution when considering buying stocks of companies that tout the potential for high returns associated with cryptocurrency-related activities without the business fundamentals and transparent financial reporting to back up such affirmations ”.
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Images courtesy of Shutterstock and FINRA.
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