FINRA Plans To Keep Crypto On A Leash
BTC Wires: The Financial Industry Regulatory Authority (FINRA), is a private regulatory body in the US, which regulates member brokerage firms and exchange markets. The Congress had approved its current structure which is that of a not for profit organization, in order to protect the interests of the investors.
FINRA has taken a growing interest in cryptocurrency for which a regulatory notice has been issued by them which would make it necessary for its members who are involved in cryptocurrency activity, to inform the authority, as and when they do so.
It seems possible that FINRA perceives cryptocurrency trading/investing as a partial Alternative Trading Systems (ATS), for which it has clear guidelines. Crypto, because of its unique nature, is often difficult to categorize into one box which bewilders most institutions.
This regulatory notice issued to all firms to keep the authorities informed on crypto-related activities is probably foreshadowing future regulations. The notice clearly outlines what is to be considered as cryptocurrency activities. However, what FINRA would do with these revelations or why it suddenly wants to know about these exchanges has not been made clear. One of the main functions of FINRA is to protect retail investors in all financial markets. What we can assume is that this move is a step towards ensuring that the investors are protected.
According to a statement they released, they issued the notice with the expectation that each firm will 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.”
This comes as a latest move in a situation where more and more regulatory bodies are keeping a close watch on crypto. The SEC in the United States has stated that they wish to encourage blockchain technology and thus plan to go gentle on the regulations. However, it cracked down on fraudulent activities in a major way this year.
With SEC’s recent regulations on ICO frauds, this move by FINRA isn’t that much of a surprise. The US regulatory communities are committed to protecting retail investors from the uncertain crypto world. As for FINRA, they do have definitive future plans but we are largely being kept in the dark as to what they are.