The United States Financial Industry Regulatory Authority or FINRA encourages broker-dealers to notify their assigned FINRA risk monitoring analyst as to whether they, their affiliates or their associated persons intend to conduct, digital asset activity. Here is also included the non-securities activity including non-securities activity.
This is a request that cannot be exaggerated due to its prolixity. of this request cannot be overstated. Associates who are deep in the market selling and buying Bitcoin that are not affiliated to FINRA and engage in digital asset activities completely separated will all be in request to report to FINRA.
This is a request that reaches beyond the expertise and even its securities mandate across the line for FINRA’s regulatory reach. There are a lot of troubles that can be found on this overreach. The first one is that FINRA’s mandate must be exclusive and restricted in terms of activities of its members.
The second one is that FINRA receives reports of the digital asset activity beyond the scope, and alter the actual FINRA set of rules and policies. This regulatory behavior is taken as an intrusion into the non-securities digital asset environment and the efforts to create an expansion beyond its domain.
For securities broker-dealers
This mandate is directed to the banking sector, the general purpose is intended to be: “To promote through cooperative effort the investment banking and securities business, to standardize its principles and practices, to promote therein high standards of commercial honor, and to encourage and promote among members observance of federal and state securities laws.”
FINRA’s expertise has focused mainly on the upgrade of skills regarding securities. This entire operation and regulations are beyond its mandate, FINRA’s concept of digital assets is: “Cryptocurrencies and other virtual coins and tokens (including virtual coins and tokens offered in an initial coin offering (ICO) or pre-ICO), and any other asset that consists of, or is represented by, records in a blockchain or distributed ledger (including any securities, commodities, software, contracts, accounts, rights, intangible property, personal property, real estate or other assets that are ’tokenized,’ ’virtualized’ or otherwise represented by records in a blockchain or distributed ledger).”
A regulatory overreach can be seen there, mainly because FINRA is requiring broker-dealers to report on non-security digital asset activity. FINRA should only request reports on qualified digital assets.
FINRA is requesting that broker-dealers directly report digital asset activity related to their affiliates and associated persons. The main statement is the request is contemplated under the rules 3210, 3270, and 3280. There is no obligation to report such activity to FINRA; these rules are closely related to the internal information-gathering policies of broker-dealers.
What is FINRA?
The United States Financial Industry Regulatory Authority is a not-for-profit organization that works under the eye of the SEC and creates engagement providing a secure environment for investors, firms, and others, generating bonds, collaborative spirit, and associations, all through a series of fair policies.
By Jenson Nuñez
